Has anyone here needed CDIC relief? | General financial discussion | Discussion forum

Back in the '90s, my dad had to wait several months, although it was not difficult process.
I believe CDIC now says it will only take a few weeks or so. This is untested in modern times. A lot has changed electronically in banking since the '90s.

No, but came really close a couple of time.

It's actually ridiculous to risk 100% of your principal for an extra 25 basis points, but as a rate chaser I did. Unlike stocks, GIC's have no upside, none.

That's a good point about people who may be relying on regular income from GICs.
For those of us who aren't, not really an issue. I got 3.5% from Oaken for five years when they were considered risky, well above going rates, which was very helpful during the last few years of very low rates.

Here is what CDIC has to say about payout timing:
"CDIC’s goal is to reimburse funds from chequing and savings accounts, joint accounts and mortgage tax accounts to depositors within three business days of the date of failure.
The international standard (PDF, 821 KB) for reimbursement, established by the Financial Stability Board, is seven days."

This commitment does not appear to extend to GICs.
However, i would think that the GICs would be automatically void and the funds would be attributed to savings or chequing up on failure of the FI. I suppose it could take a little bit of time for that process to take place, but then they should be paid out quickly. What do others think?

I can't seem to find the direct link to that page but it came up when I googled "cdic when will it pay out" and it is a cdic page.

Yes, it's a goal. I realize that. But it does refer to an international standard, which I didn't know existed, and it's a heck of a lot faster than what my dad experienced. I think the standard did not exist then.

It's a good reminder though to keep up to date with saving your statements and transaction details. Statements may never be completely up to date but better than nothing.

Here''s the link to the international standards if anyone wants to read it:
https://www.fsb.org/wp-content/uploads/r_141015.pdf

What it says, more specifically, is:
"General resolution powers
3.2 Resolution authorities should have at their disposal a broad range of resolution powers, which should include powers to do the following: ...
(xii) Effect the closure and orderly wind-down (liquidation) of the whole or part of a failing firm with timely payout or transfer of insured deposits and prompt (for example, within seven days) access to transaction accounts and to segregated client funds)."

Not exactly an airtight guarantee but could be worse.

A lot has improved since the 1990's.

Under the CDIC Data and System Requirements By-law, CDIC members are now required to have capability to provide insured deposit information within six hours of a request from CDIC.

It is a good idea to keep statements and other evidence of deposit balances. An affidavit from the depositor that there was $50,000 in his HISA isn't going to be enough when the financial institution data extract only shows $500.

AltaRed said

CDIC usually sells 'the book' to another institution perhaps at 90 cents on the dollar or whatever market currently is relative to the 'book of GICs'. That could mean all the GICs are sold to another FI that puts their letterhead on the GIC. The fine print on that GIC you bought probably has a successors and assigns clause to permit that.

To answer the OP, I had GICs with Principal Trust in AB back in the early '80s. Principal Trust went teats up and a month or two later I got a letter from another FI that said they had taken over the obligations under the same terms and conditions, including term and maturity. Principal Trust is listed under the CDIC link for 'failures'.  

While it is true that CDIC can arrange for a sinking FI's life to come to an end by arranging for its business to be absorbed by another FI, sometimes there are no takers and it really does fail completely. I think that is what the OP was inquiring about. It was that circumstance in which my dad got his money in the form of a cheque from CDIC. The arrangement for registered funds would probably be a bit different, not a cheque, probably a form telling you your balance and asking you where you want it transferred to.

Another lesson from history.
https://archive.macleans.ca/article/1983/6/13/the-fall-of-a-financial-empire

CDIC has also been involved when it didn't issue any cheques directly to depositors. Instead, CDIC can write a big cheque to another financial institution in return for assuming the liability for the deposits of the failing CDIC member.

That was the case in the failure of Central Guaranty Trust in 1992 when TD Bank assumed the Central Guaranty Trust deposits.

According to page 32 of CDIC's 2021 annual report, Adelaide Capital Corporation was formed to hold the remnants of Central Guaranty Trust for CDIC to try to recover the funds CDIC had to give to TD:

The [Canadian Deposit Insurance] Corporation’s consolidated financial statements include the results of Adelaide Capital Corporation (ACC), a structured entity created by CDIC in 1992 to effect the failure of Central Guaranty Trust Company and Central Guaranty Mortgage Corporation. …

So, decades later, CDIC still has not recovered all that money and ACC is still around.

I recognize this is first and foremost a 'HISA and GIC' investing site, and this is way off tangent to this thread, but to continue off tangent for a moment for those early (earlier) in their investing journeys........

With a diversified portfolio and time in the market, it is almost inconceivable to have ever lost in the stock market. The trend line of the MSCI World Index is to the northeast. Sure there are individual years when the stock market is down (recessions), and individual countries like Japan which have struggled for long periods, but over time, diversified stock market investing is like cutting grass. Some years produce better crops than others but most years there is grass to cut (profits that can be taken).

New products developed in the past 5 years make this super simple for retail investors. Invest in just one (or a few if one likes) of the Asset Allocation ETFs from Vanguard, Blackrock, or even BMO and go on about one's life. It is all one needs until they go out boots first.

This link is focused on Vanguard but this site https://www.canadianportfoliomanagerblog.com/how-to-choose-your-asset-allocation-etf/ is one of the very best to examine anything one can think of on Asset Allocation ETFS. Justin Bender and his cohorts perform an admirable public service above and beyond their primary portfolio management business. More information here https://www.canadianportfoliomanagerblog.com/category/etfs/asset-allocation-etfs/

Alexandre said
How come? I would have thought one will eventually get back 100% of their principal, with only loss of interest. As long as GIC is under CDIC insurance limit. 

Yes, if GIC does not exceed $100,000 and covered by CDIC