New Zealand lenders face a growing Reserve Bank prudential levy burden – and BusinessNZ is now pushing for a formal review of charges that could affect borrowing costs
New Zealand's registered banks and non-bank lenders are looking at a compounding series of new compliance levies. The country's peak business body wants the government to review whether they are justified.
Budget 2026 introduced a Reserve Bank prudential levy on banks, non-bank deposit takers, and insurers, estimated to recover around $209 million over four years. That charge is expected to take effect from mid-2027, following consultation that opens in late July 2026.
Separately, the Ministry of Justice has proposed that banks pay approximately $23.2 million a year. That figure represents 85% of the total cost of overseeing the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act). Collection is set to begin from 1 July 2027.
For mortgage advisers, the combined direction of travel points one way: more regulatory cost on lenders, with the pass-through question still unanswered.
What BusinessNZ is asking for
BusinessNZ chief executive Katherine Rich wrote to Deputy Prime Minister and Minister for Regulation David Seymour this month. She called for the Ministry for Regulation to audit all levies in New Zealand against the principles of good regulatory practice in the Regulatory Standards Act 2025. These came into force on 1 January 2026.
The levies flagged include:
- Fire and Emergency New Zealand (FENZ) funding
- Ministry of Primary Industries cost recovery
- waste levies
- AML/CFT compliance costs
- the Reserve Bank prudential supervision charge
"BusinessNZ considers that it would be timely for you to direct the Ministry for Regulation to undertake a review of all levies in New Zealand, to ensure that they are consistent with the principles of good regulatory practices outlined in Section 9 of the Regulatory Standards Act," Rich said.
BusinessNZ chief economist John Pask said the review was not a call to abolish levies. It was a call to apply consistency to a system that had grown without a coherent framework.
"Things have tended to develop in an ad hoc manner over the last two or three decades," Pask said. "We need a comprehensive review to see that they're still actually relevant in today's society."
The broker implication
The prudential levy and the AML/CFT charge sit at the sharper end of the list for the lending sector. Finance Minister Nicola Willis has told banks they should absorb the prudential levy cost rather than pass it on to customers. Deputy Prime Minister David Seymour publicly disagreed within hours of the announcement.
The Ministry of Justice's own modelling estimated the AML/CFT levy would amount to just over 0.2% of banks' cumulative pre-tax profits – a figure officials described as modest.
Banks have pushed back. The New Zealand Banking Association argued the 85% allocation to registered banks was not fair. It did not reflect the compliance investment banks had already made in the AML/CFT system.
What it means for borrowers and brokers
For advisers, the concern is not any single levy but the stack. Each charge has been framed by officials as modest in isolation. Together, the prudential levy and the AML/CFT cost add a combined pressure on lender cost bases that has no clear resolution — and no confirmed answer on whether banks will absorb it or pass it on.
Pask framed the cumulative pressure in terms of inflation and competitiveness.
"At the end of the day, it's not good in terms of inflation or ensuring that businesses remain productive and internationally competitive," he said.
BusinessNZ's push adds political momentum to that concern. With New Zealand businesses already navigating a patchy recovery and rising cost pressures, any further upward pressure on lender cost bases is a variable advisers should track. The Reserve Bank consultation opening in late July 2026 will be the first opportunity for the sector to push back on how the prudential levy is structured and who bears the most.
