"This role fits well with the Reserve Bank’s current prudential role in relation to banks," Finance Minister Dr Michael Cullen said.

NBDTs are a growing part of the financial sector. However, there has been concern that inexperienced investors may not be adequately aware of the risk profile of their investment. This was highlighted last year with the collapse of three finance companies, Commerce Minister Lianne Dalziel said.

To assist investors know the level of risk they are taking, NBDTs will be required to obtain and publicly disclose a credit rating. Cabinet will be considering options for minimising the costs of a ratings regime, particularly for smaller NBDTs.

In light of these changes, Cabinet has confirmed that credit unions will have the equivalent flexibility in borrowing, investing and raising capital as other NBDTs.

The Ministers confirmed that trustee companies will remain the frontline supervisor for NBDTs, and that the Reserve Bank will be prudential regulator.

"In designing these changes, we’ve acknowledged that trustees play an important role in the current supervision of NBDTs and that there are benefits to that model we don’t want to lose, such as the ability to work more closely with an NBDT and the tailored skills and expertise a trustee can bring to the role," Dalziel said.

Under the new regime, trustees will be responsible for establishing a trust deed for particular offers of securities, prescribing the financial, reporting and other covenants in the trust deed, enforcing trust deed covenants, and supervising and monitoring NBDTs. Trustees will be licensed by the Securities Commission.