CBS Canterbury says the financial sector would be better off without the extension of the Crown Retail Deposit Scheme when it runs out in October next year.
The building society's chief executive, Bryan Inch, says the scheme has caused unnecessary distortions after being put in place during the height of the global financial crisis last year.
Mr Inch says one option is to have guaranteed and unguaranteed products, so there is the potential for the extended guarantee to be offered on a more user-pays basis.
He says that would mean a higher deposit rate for an unguaranteed product than for a guaranteed one.
Critics claim the scheme has been used to prop up struggling finance companies, with the risk being unfairly borne by taxpayers.
The extension of the scheme brings it in line with Australia's scheme.