On October 7, 2006 the Canada Deposit Insurance Corporation ("CDIC") pre-published the By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law (the "Amending By-law") in the Canada Gazette1 after consultation and discussions with industry stakeholders.
Significant changes proposed by the Amending By-law include:
Member institutions, in addition to their subsidiaries or affiliates, will be required to identify on money market mutual fund sales communications that these products are not CDIC insured. A similar requirement is imposed by National Instrument 81-102 in most provinces.
Member institutions must make warning statements about uninsured deposits (i.e. "negative stamping") using more flexible descriptions, which are prescribed.
Member institutions will no longer be required to maintain an up-to-date deposit register, which is often seen as a burden. Instead, member institutions will only be required to display (and make available) the general information brochure provided by CDIC. They will also be required to prepare, maintain and file a list of eligible deposit products annually with CDIC.
Member institutions will be entitled to initiate discussions regarding deposit insurance without first being asked by a client but will continue to be limited in terms of what representations may be made about deposit insurance to matters outlined in the CDIC information brochure.
Member institutions that operate Web sites on their own or in conjunction with other institutions will be required to display directly, or through a hyperlink, both the CDIC membership sign and the CDIC information brochure.
In addition to the significant changes mentioned above, certain technical changes have proposed by the Amending By-law. The Amending By-law will come into force shortly after the expiration of the required 45 day review and comment period.
The Canada Deposit Insurance Corporation Deposit Insurance Information By-law (the "Original By-Law") came into force on March 1, 1998 and was amended in September 1999 and October 2001. The Original By-law was enacted to permit member institutions to provide specific information to depositors about CDIC and more specifically, about insurance coverage provided by CDIC.
We would be pleased to assist in preparing any comments you may have regarding the proposed Amending By-law by making representations to CDIC prior to November 21, 2006.
Please contact a member of our Financial Services Group if you would like more information about the Amending By-Law:
Rebecca C. W. Chan ((Toronto), Debra Sing (Vancouver), Allan Nielsen (Calgary); or Patricia Galella (Montreal)
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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