Canada: Deposit Insurance Review: Improving The Current Framework

On September 16, 2016, Canada's Department of Finance (Finance Canada) published for comment the Deposit Insurance Review (Consultation Paper). The Consultation Paper ensues from the Budget 2014 announcement of the launch of a comprehensive review of Canada's deposit insurance framework to ensure that the framework provides adequate protection for the savings of Canadians. The consultation period runs until November 30, 2016, and written comments can be submitted here.

The deposit insurance review is guided by three broad policy objectives:

  1. Protect depositors: The deposit insurance framework should protect depositors by ensuring that it provides an adequate scope and level of coverage
  2. Support financial stability: The deposit insurance framework should contribute to the stability of the financial system in Canada and act as a disincentive for bank runs to develop
  3. Promote efficient and competitive financial services: The deposit insurance framework should encourage market discipline and should not act as an impediment to competition

The Consultation Paper notes that, overall, the current framework administered by the Canada Deposit Insurance Corporation (CDIC) meets the above objectives and therefore no major changes are required. In particular, it concludes that the existing coverage limit of C$100,000 per eligible deposit category remains appropriate.

On August 26, 2016, Finance Canada published a consultation paper entitled Supporting a Strong and Growing Economy: Positioning Canada's Financial Sector for the Future, which is vague on specific proposals for amendments to the legislative or regulatory framework of the federal financial sector (see our August 2016 Blakes Bulletin: Canada's Financial Sector: Legislation for the Future). Unlike that consultation paper, this one contains a number of detailed proposals that could improve the current deposit insurance framework. The federal government is soliciting feedback on a number of specific questions relating to those proposals.

The three areas that the Consultation Paper has identified as meriting consideration are: streamlining deposit categories; updating the scope of eligible deposits; and addressing the complexity of trusts. The specific proposals in respect of each area are outlined below.


Mortgage Tax Accounts: Under the current framework, deposits held in mortgage tax accounts are classified as a distinct insured deposit category. However, given the decline in the use of mortgage tax accounts, the government is considering eliminating this category. Funds held in these accounts could still receive coverage under another eligible deposit category, but would no longer have a separate $100,000 coverage limit.

On this point, the Consultation Paper poses the following question: What are your views on removing the mortgage tax account as a deposit category?

Registered Products: Currently, only Registered Retirement Savings Plans, Registered Retirement Income Funds and Tax-Free Savings Accounts are treated as separate categories of eligible deposits, while other registered products such as Registered Education Savings Plans (RESPs) and Registered Disability Savings Plans (RDSPs) are included in the more general trust or individual coverage categories.

The government is considering adding two new eligible deposit categories for RESPs and RDSPs to ensure that each registered product is equally covered up to the C$100,000 limit. As an alternative, the government is considering creating a separate category with a higher limit that includes all registered products, however, the Consultation Paper notes that this introduction of multiple limits would add a layer of complexity to the existing framework.

On this point, the Consultation Paper poses the following question: What are your views on adding RESPs and RDSPs as new deposit categories or the amalgamation of all registered products into one deposit category?


Traveller's Cheques: Although traveller's cheques are currently classified as an eligible deposit, CDIC member institutions no longer issue these instruments and instead offer third-party traveller's cheques that are not covered by deposit insurance. The government is therefore considering simply removing traveller's cheques from the types of eligible deposits.

On this point, the Consultation Paper poses the following question: What are your views on removing traveller's cheques as eligible deposits?

Products with Terms Greater than Five Years: Under the current framework, only term deposits with original terms to maturity of five years or less are classified as eligible deposits. However, in recent years, the popularity of term deposits, including Guaranteed Investment Certificates, with periods longer than five years has risen. The government is considering removing the five-year limit for this type of deposit to better reflect current trends.

On this point, the Consultation Paper poses the following questions:

  • What are your views on extending deposit insurance coverage to term deposits with terms of maturity greater than five years?
  • Should there be a maximum term?

Foreign Currency Deposits: Under the current framework, only deposits held in Canadian currency are eligible deposits. However, given that foreign currency deposits are widely held by Canadians, the government is considering extending the scope of eligible deposits to include foreign currencies. The Consultation Paper notes that this would significantly increase CDIC's exposure.

On this point, the Consultation Paper poses the following questions:

  • What are your views on the inclusion of foreign currency as an eligible deposit?
  • Should only certain foreign currencies be insured? If so, which currencies should be covered and why?

Temporary High Balances: The government is considering extending coverage to temporary high balances that may result when a natural person transitions through a major life event (such as the sale of a home). The Consultation Paper notes several challenges in implementing this coverage that would increase the CDIC's exposure and add complexity to the current structure. These include differentiating between personal and corporate depositors and the necessity of adjusting coverage to meet shifting external factors.

On this point, the Consultation Paper poses the following questions:

  • What are your views on extending deposit insurance coverage to include temporary high balances?
  • If you would like to see coverage extended to temporary high balances, which transactions would you propose be covered (e.g. real estate, insurance settlement, inheritance)? How would these transactions be identified? What would be the appropriate definition of "temporary" (e.g. 45 days, 90 days, 180 days)?


Disclosure Requirements: Currently, trusts are a deposit insurance category that allows each beneficiary to receive separate coverage of up to C$100,000, subject to the trustee providing and updating specified information about the trust for inclusion on the CDIC member institution's records. However, trustees are not required to provide beneficiary information on a regular basis and the CDIC member institutions are not required to report this information to the CDIC. In addition, certain professional trusts are exempted from disclosing beneficiary information.

Given the importance of beneficiary information to the accuracy and speed of deposit insurance payouts, the government is seeking views on how to improve the quality of the information available to CDIC.

Brokered Deposits: The Consultation Paper considers two types of brokered deposits. The first is where the broker acts as agent and the amount deposited is considered part of the client's C$100,000 limit in the individual category of deposit insurance. The second is where the broker acts as trustee and the client is the beneficiary of the amount deposited. In the latter case, the broker may be reluctant to provide beneficiary information to the CDIC member institutions who are potential competitors of the broker. The government is considering ways to improve disclosure so that beneficiaries of brokered trustee deposits retain their coverage.

On the above two points, the Consultation Paper poses the following questions:

  • In your view, how can the quality of beneficiary information be improved?
  • In your view, how should brokered deposits be treated under the deposit insurance framework?
  • Are beneficiaries aware of the consequences of their broker not providing beneficiary information?
  • Are the reporting and record keeping requirements for professional trusts clear?


One important issue that the Consultation Paper fails to address is that, in order to qualify as an eligible deposit, the deposit must be received or held by the CDIC member institution "in the usual course of the deposit-taking business of the institution". This is one of the most difficult elements to interpret under the current framework and the Consultation Paper does not propose to clarify it. In particular, while the review aims to evaluate the types of financial products that are covered to ensure that Canada's deposit insurance framework remains relevant in today's marketplace, as we continue to move further away from deposits taken over the counter in a physical location, failure to address this issue may leave a gap in coverage that will not be clear to customers.


As noted above, the consultation period runs until November 30, 2016 and written comments can be submitted here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions