Area of Law: Financial Institutions
Answer # 1254
If your bank, trust or loan company fails: Canada Deposit Insurance Corporation (CDIC)Region: Ontario Answer # 1254
If you have deposited money in a bank, trust or loan company that is a member of the Canada Deposit Insurance Corporation, known as the CDIC, you may be eligible for some compensation if your financial institution fails. Whether you receive compensation will depend on whether your financial institution is a member of the CDIC and the type of deposit you have made.
How to determine if your financial institution is a member of CDIC
Banks, trust, and loan companies that are members of the CDIC usually display a sign in the branch or office that identifies them as a member institution. Most major banks and trust companies are insured by CDIC. Visit CDIC for a full list of member institutions.
What type of deposits are eligible for coverage?
CDIC insures several types of deposits, including: savings and chequing accounts, term deposits, including GICs, money orders and drafts, certified drafts and cheques, traveller’s cheques, and deposits held in RRSPs and TFSAs that are issued by institution members. All eligible deposits must be in Canadian currency. Term deposits must be payable no later than five years after the date of deposit to be eligible for coverage.
CDIC does not insure: foreign currency deposits, term deposits with a maturity of more than five years from the date of deposit, debentures issued by chartered banks, bonds and debentures issued by governments and corporations, Treasury bills, and investments in mortgages, stocks and stock options, money market funds and mutual funds. Also, bankers’ acceptances and Principal Protected Notes or PPNs are not insured by CDIC.
What type of coverage does CDIC provide?
CDIC provides a maximum of $100,000 per depositor in each member institution. CDIC also provides separate protection for joint deposits, deposits held in trust, and deposits in RRSPs and RRIFs. Joint deposits are insured separately from accounts in your own name, to a maximum of $100,000. The records of the financial institution must indicate that the account is owned jointly. Trust deposits are also insured separately from accounts in your own name. The records of the financial institution must indicate that the account is held in trust and it must identify the beneficiaries. Each beneficiary’s portion of the trust is insured up to a maximum of $100,000.
What if member institutions merge?
If one member institution merges with another member institution, and if the result is that your total insurable deposits with the new member institution exceed $100,000, your insured deposits in savings and chequing accounts in each institution will continue to be insured until they are withdrawn. Insured term deposits will be insured until they mature. However, if you make new deposits at the merged institution, your deposits will not be insured above the maximum of $100,000.
How to make a claim
If your financial institution fails, you do not have to file a claim with CDIC. They will contact you and inform you of how and when you will receive payment. You will usually receive your payment within two months.
Deposit insurance with credit unions
The Deposit Insurance Corporation of Ontario (DICO) is an Ontario Provincial Agency established under the Credit Unions and Caisses Populaires Act, 1994. The role of DICO is to protect depositors of Ontario credit unions and caisses populaires from loss of their deposits. Contact Canada Deposit Insurance Corporation, or the Financial Services Regulatory Authority of Ontario (FSRA), for more information.
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