The rejected approach suggested tier one, or Approved Deposit Takers (ADTs).

Any deposit-taker could elect to become an ADT provided that they meet the licensing and ongoing supervisory requirements imposed by the prudential supervisor, the Reserve Bank.

These requirements would include a minimum level of capital, a minimum capital adequacy ratio, a minimum credit rating, a limit on related party exposures, and some governance and disclosure requirements.

The second tier, known as the Enhanced Trustee Model had less onerous undertaking. While entities would face enhanced disclosure requirements and would be supervised by trustees and the Securities Commission.

It was proposed that they also meet other requirements such as a minimum capital requirement, possibly a mandatory credit rating, enhanced disclosure, capital adequacy measurement framework, more fit and proper person requirements.

“We put it out to the market and they have given it a pretty clear thumbs-down,” Dalziel told Good Returns.

Other options are now being evaluated, and although these have not yet been decided on, “the most obvious is to have one regulatory model for all non-bank deposit takers.”

Other proposals in the wide-ranging review of the financial sector are aimed at financial advisers, insurance brokers, and other parts of the sector look like going ahead with minimal change.

Dalziel says a paper on these changes will go to Cabinet either in late May or June.

Any rule changes will take effect from early 2009.