On September 12, 2016, the Canada Deposit Insurance Corporation
(CDIC) published for comment a
consultation paper (Consultation Paper) proposing amendments to
modernize CDIC's Deposit Insurance Information By-law (By-law),
which governs how the CDIC member financial institutions are
required to inform Canadians about deposit protection.
This consultation is in addition to the consultation paper
titled Deposit Insurance Review that was published by
Canada's Department of Finance (Finance Canada) on September
16, 2016 (see our September 2016 Blakes Bulletin: Deposit Insurance Review: Improving the
Current Framework) to solicit feedback on a number of
specific proposals to improve the deposit insurance framework. Like
Finance Canada's consultation paper, this Consultation Paper
seeks feedback on a number of specific proposals, although notably
neither consultation paper references the reforms proposed by the
The By-law currently requires members to prominently display
CDIC signage at their place of business, provide CDIC brochures in
branches, and post a CDIC membership notice on their websites. The
last comprehensive review of the By-law dates back to 2006 and the
amendments proposed in this Consultation Paper aim to modernize the
By-law and improve the clarity, usefulness, and timeliness of
information provided by CDIC members to depositors through all
banking platforms, including electronic banking.
The proposed changes can be summarized into two themes:
Provide clear, simple and not
misleading information to depositors. Proposals include
requiring members to provide depositors with the CDIC brochure (as
opposed to simply making it available) prior to entering into a
deposit agreement, and updates to the CDIC membership sign. CDIC is
also soliciting feedback in relation to proposals regarding the use
of trade names by members, and negative and positive
representations about deposit product eligibility.
Ensure all depositors receive
useful information on deposit insurance at the appropriate time,
prominently displayed across all distribution channels.
Proposals include: updates to make the By-law technology neutral;
and updates to the display requirements for the CDIC membership
sign and brochure to ensure appropriate information is provided to
depositors, irrespective of the distribution channel. CDIC is also
soliciting feedback on proposals in relation to how member
institutions can better ensure their clients are appropriately
informed about CDIC deposit insurance protection when seeking out
members' eligible deposit products through financial advisers
or deposit brokers.
Careful consideration should be given to the proposals in this
Consultation Paper to determine whether they will be workable for
all industry participants, products and distribution channels.
The consultation period runs until October 28, 2016.
The CDIC notes that, following this consolation process, further
consultation will be undertaken through pre-publication of the
amending By-law in the Canada Gazette. The CDIC
anticipates that the amending By-law will be in force in June 2017
and that it will provide for a six-month transition period prior to
the amendments becoming effective.
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.
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