Caution If You Bought or Are Thinking of Buying East Coast Credit Union GICs | Page 4 | GIC discussions | Discussion forum

Norman1 said

sothisistheinternet said

… But I'm at the point where I need to very quickly see a public statement from NSCUDIC and/or ECCU that clearly, unreservedly says something to the effect of: "Sorry for the ****show, but be assured that all members who previously made deposits through brokers were and remain fully covered."

It has to be crystal clear to me that this UNINTENTIONAL and UNDELIBERATE mistake at no point exposed any members.
…

Not sure why you are expecting anything like that. No such statement is coming because such a statement would be false.

Norman1 is right on the money. You can't undo what has already happened. If ECCU goes bankrupt before those courtesy shares can be assigned to those GICs purchased via brokers, then there is still no coverage; regardless of any promises made by ECCU. There is no time machine. While those GICs holders can probably be 'made whole' by a share issue at this time, that deficiency existed in the past and cannot be erased. It exists until those missing shares are issued.

NSCUIDC is probably not able to do anything about it, either. It would take a lot of work to change the parameters of its policy. If ECCU had gone down, NSCUIDC would likely find difficulty in changing its rules and then applying them retroactively to ECCU in order to cover the share deficiency. It might not be impossible, but would likely be a political decision.

Loonie said
Second, let's say ECCU decides to fix the situation by enrolling deposit broker clients as members starting now. There could be a problem with ECCU's by-laws. I think I looked at them a while ago, before GR's research, but am not entirely sure if it was ECCU that I looked at or another CU. In any case, by-laws may restrict membership to residents of NS. If it requires a by-law amendment to do otherwise, this will require either an AGM or a specially-called GM. These take time. Maybe the existing by-laws provide some wiggle room, but maybe not.  

While I was on the phone with ECCU rep, she was proud to tell me that ECCU was nationwide and that I could get an ECCU mortgage even in Alberta.

This share issue may not be limited to GIC holders bought via brokers, if NS residency is required for other products.

HermanH said
While I was on the phone with ECCU rep, she was proud to tell me that ECCU was nationwide and that I could get an ECCU mortgage even in Alberta.

This share issue may not be limited to GIC holders bought via brokers, if NS residency is required.  

Me borrowing money from them is very different from me lending them money, just saying.

As I already mentioned, I speculate ECCU may choose NOT to issue member shares to bypass the NS residents requirement ? We don’t know if NS residents thru brokers are issued share or not. Only ECCU know the real story. I also think ECCU actually believe all investors are covered even without actual physical share, which turns out to be dead wrong.

That means there is no impediment for ECCU to issue common shares to deposit broker clients who are not Nova Scotia residents.

Loonie said

That said, most CUs seem to have some provision for a limited number of members who wouldn't normally qualify. I read that 3% of members could be unqualified at one CU but can't remember which one it was.  

That really inspires my confidence in the credit union systems/rules.
Looking forward to hear if non members holding CU GICs purchased from a GIC agent do or do not have insurance coverage.

True. But there are 3 questions. One is if or how non-residents can be deemed to be members; second, if it's possible, was it done or can it be done; and the 3rd is insurance. The insurance question does seem clear: If 1 and 2 are not possible, then 3 is not either.

Bill said
I recently read, due to mortgage stress tests imposed on banks that some credit unions are now expanding their business with riskier mortgage loans that banks can't take, maybe someone here knows if that's true or not - ?  

100% true, CUs are not federally regulated and thus the stress test imposed does not apply to CUs. Having said that, some CUs (obv not all) follow the stress test guideline nonetheless, while others have similar test but set the bar lower for individual borrowers based on the CU's own risk management practice. This is from an article from the National Post last week, that must be what you read.

Given the small size of most CUs, one can imagine they are more prone to misinterpret regulation (such as ECCU) etc, and even worse pass he wrong info along until someone like GR questions it. Again when and what rate to invest in a GIC is a guessing game, whether its insured or not should be 100% certainty, not assumptions or cuz someone in the biz for 30 years said so. I usually counter "it may just mean the person who has done it for 30 years has been wrong for 30 years", and thats enuf to offend some people unfortunately. Whether the intention is deceit or an honest mistake is not relevant in my books.
Hey its my money !

Just got off with Kevin Rotenberg and told him about the ECCU and NSCUDIC discoveries posted on this thread and he is still adamant that ECCU does what is needed to ensure that their GICs are fully covered. He still believes that he would never sell a GIC that wasn't insured. I told him that wasn't the case and that ECCU did not issue a courtesy share the way DUCA does. He asked me to send him any evidence to the contrary.

Could GR please send him a copy of your e-mail from ECCU and NSCUDIC? It might be helpful if you just mention my name (Herman) in the response.

kevin@gicwealth.ca

HermanH said
Just got off with Kevin Rotenberg and told him about the ECCU and NSCUDIC discoveries posted on this thread and he is still adamant that ECCU does what is needed to ensure that their GICs are fully covered. He still believes that he would never sell a GIC that wasn't insured. I told him that wasn't the case and that ECCU did not issue a courtesy share the way DUCA does. He asked me to send him any evidence to the contrary.  

He probably does believe that - but reality is there is nothing documented anywhere and particularly by NSCUDUC in NS nor by FSRA in Ont that GICs sold via Agents are covered without being a CU member.
Bottom line - in court it likely could not be proven that purchasers are insured under FSRA if they are not a CU member which is stated as a necessary condition on FSRA site.
This is another amateur issue related to CUs which surely can be easily resolved by a statement from NSCUDUC and FSRA and/or the GIC agents IN WRITTEN form, not just "I believe...". Courts need documentation not just "beliefs".