Depositor Compensation Scheme
What is the Depositor Compensation Scheme?
The Depositor Compensation Scheme (DCS) is a new government initiative run by the Reserve Bank of New Zealand – Te Pūtea Matua (RBNZ). It’s funded by Banks and Non-Bank Deposit Takers included in the Scheme, known as Licensed Deposit Takers.
From 1 July 2025, the DCS provides depositors cover of up to $100,000 per Licensed Deposit Taker if that institution was to fail.
In plain English: if a Licensed Deposit Taker fails, the DCS steps in to protect any funds you hold with that institution, up to the $100,000 limit. It’s all about giving New Zealanders more confidence and keeping our financial system steady.
There are a lot of devils in the detail with the DCS, you can read more about it on the RBNZ site.
How does the DCS apply to your Squirrel On-Call account?
While Squirrel isn’t a Licensed Deposit Taker under the DCS, here’s where it gets good.
When you put money into your Squirrel On-Call account, we hold it on bare trust specifically for you. We split the total balance of funds held in investor on-call accounts approximately 50/501 between two major banks - BNZ and Westpac.
Because both of these banks are Licensed Deposit Takers under the DCS, your funds automatically qualify for DCS cover through them – giving you up to $200,0002 of total cover ($100,000 per bank, per investor entity).
A few important bits to note
Existing accounts count
If you already have money with BNZ or Westpac, the $100,000 DCS limit applies to your total balance with each bank - including anything you hold directly or indirectly (like through your Squirrel On-Call account).
Cover is assessed per investor entity
If you have funds in your On-Call account under your personal name, and other funds in an On-Call account associated with your company or trust, you may qualify for DCS cover up to $200,0002 for each investor entity.
Your money is always yours
Funds in your On-Call account are held on bare trust for you - we’re simply the custodian acting on your instructions. These funds are also completely separate from Squirrel’s own business funds.
Joint accounts are split
If you have a joint account with a Licensed Deposit Taker, the DCS cover is split equally between account holders. This may reduce the amount of cover you’re personally eligible for. It’s best to seek independent advice to make sure you understand how the DCS may apply to your situation.
What's not covered by the DCS?
Squirrel isn’t eligible to participate in the DCS directly because we’re licensed and regulated by the Financial Markets Authority (FMA), not the RBNZ. To qualify for DCS cover, we’d have to be a Bank or Non-Bank Deposit Taker – and that’s not on our roadmap.
That means money you invest with Squirrel via our Managed Funds or Term Investments isn’t covered under the DCS.
Instead, we’ve built our own layer of protection – our Reserve Funds – to help safeguard investors in these products. You can read more about that in our Reserve Fund Policy.
Got more questions?
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1 Squirrel aims to keep the On-Call funds split 50/50 between BNZ and Westpac, but the actual percentage will shift slightly day to day.
If either of the banks were to fail, the DCS cover would be based on the actual split at that time.
For example, if an investor had $200,000 in a Squirrel On-Call account on the day both of the banks failed, and the split was 45% BNZ and 55% Westpac, the DCS would consider $90,000 (45%) at BNZ and $110,000 (55%) at Westpac. Since DCS cover is capped at $100,000 per bank, $10,000 would not be covered in this example.
2 The exact amount of DCS cover you’re eligible for will depend on your individual circumstances – for example, how much you already hold with BNZ or Westpac, and under what name or entity.
The $200,000 figure we’ve mentioned represents the maximum possible cover available through both banks under the DCS. Your actual cover could be lower depending on your personal situation.