Question of the Week: Does CDIC cover investments?

Submitted by nsscadmin on Wed, 04/08/2020 - 12:03

Many people are worried about their investments right now. Which led to one reader wondering if Canada Deposit Insurance Corporation (CDIC) covers investments.

Before we answer that question here’s a quick overview of what CDIC does. The CDIC is a federal Crown corporation that protects eligible deposits at specific financial institutions of up to $100,000 in case of institution failure. The coverage is free and applies automatically to eligible deposits.

So, are investments eligible deposits? The answer for most investments is no. Deposits that are not covered by CDIC include foreign currency, treasury bills, and investments in stocks, bonds and mutual funds. Cryptocurrency deposits are also NOT covered by CDIC.

Deposits that are covered by CDIC include saving and chequing accounts, money orders and drafts, travelers cheques, term deposits and GICs. One important note for term deposits and GICs. These deposits are only covered if their term to maturity is five years or less.

For more information on CDIC visit their website at www.cdic.ca/.

While CDIC does not protect investments there are a few protections that are available to investors, including the Canadian Investor Protection Fund (CIPF) and the Mutual Fund Dealers Association of Canada Investor Protection Corporation (MFDA IPC).

First we’ll look at the CIPF. The CIPF protects investors, who are clients of IIROC member firms, from loss due to the insolvency of the firm. CIPF does not provide protection against other types of losses due to risk or fraud. For more information on who is covered by CIPF and the limitations of that coverage, visit the CIPF website at www.cipf.ca.

The MFDA IPC covers investment losses incurred as a result of the insolvency of MFDA member firms. MFDA IPC does not cover losses from market changes, or unsuitable investments. For more information on the MFDA IPC, visit the MFDA website at https://mfda.ca/mfda-investor-protection-corporation/.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.