[EXPIRED] Pace Credit Union - 3.10% on a 2 year term deposit | GIC discussions | Discussion forum

Must be resident of Ontario.
This CU has been around quite a while; may have changed name.

2-year term (min $25K) with Pace CU is 3.25% @ gicwealth.ca

Koogie said
Saw this one advertised on the tv today.
They are an Ontario CU, so DICO rules.

Now Offering 3.10% 2-Year Term Deposits
https://www.bankwithpace.ca/term-deposits-2-year/

~ new money only, 5000$ minimum, yada yada.

Caveat emptor.  

[Emphasis added]

"Caveat emptor," indeed, Koogie, in way more ways than just the usual "net new money only" and minimum dollar values.

As Elaine and Yaftica have eloquently explained in the "Pace Securities" discussion thread, we have confirmed reports of Pace Savings & Credit Union, Limited, subsidiary Pace Securities Corporation financial advisor employees misselling Pace Financial, Limited, preference shares to customers of the credit union who, in most cases, came in to the credit union to buy a GIC or, at most, have a discussion on other investment products like Pace Savings & Credit Union preference shares, self-directed investment accounts, and/or mutual funds, not buy the preference shares of a second-level Pace Savings & Credit Union, Limited, wholly-owned subsidiary whose sole purpose was to engage in leveraged junk bond investing. Equally problematic was (a) this misselling was done without either (i) suitability assessments having been done or (ii) suitability assessments having been done without the adequate disclosure and due diligence to the client and (b) Pace Savings & Credit Union employees broke internal IIROC/MFDA and/or provincial securities rules, regulations, and/or legislation, as applicable, by providing information that only Approved Persons (i.e., dealing representatives) of self-regulatory organizations like MFDA and IIROC can provide. Specifically included in this was the confirmed report by Elaine of a Pace Savings & Credit Union, Limited, front-line receptionist or teller mentioning potential returns. This is strictly prohibited by the rules, regulations, and legislation, as applicable.

As well, it's also worth noting this was done in contravention of securities laws governing transactions in related parties. That is, Pace Securities Corp. was essentially acting as both dealing advisor and banker/broker for the issuer, Pace Financial, Limited, of the preference shares.

And, let's be real, folks: Pace Savings & Credit Union, Limited, created this single-purpose Pace Financial, Limited, subsidiary to issue the preference shares knowing full well that Pace Savings & Credit Union, Limited, members were attracted to the credit union's preference shares. However, to issue the preference shares of the credit union, they would have to push that through the credit union's principal regulator(s), at the time, then named FSCO and DICO (now combined as FSRAO). Moreover, there may be restrictions on what they could do with that capital.

Say what you will, but let's face facts...Pace Savings & Credit Union, Limited is confirmed to not be blameless here. Class action lawsuits, of which the lead plaintiffs are supposedly indemnified in terms of legal costs in the event of their loss through Ontario's Class Proceedings Fund, are inevitable here. I strongly suspect, at minimum, Pace Savings & Credit Union, Limited, will seek to settle those suits out of court, for which it will have to incur a charge to their earnings, which will reduce their members' equity. This, in turn, may require the credit union to raise additional capital.

Let's also not forget, too, that Pace Savings, despite having returned to notional member-controlled governance with a new Board of Directors, is still under regulatory administration by FSRAO on an indefinite basis (of at least another year, perhaps longer). This means that that the credit union has the highest risk ratings imposed on it by the regulator.

It may also be worth noting that Pace Savings' deposits declined by 10-20% year-over-year from 2019 to 2018.

This is a hard avoid as, ultimately, I think sees Pace Savings & Credit Union members' equity, deposits, and loans combined with another provincial or federal credit union. In fact, this could be Coast Capital Savings' entry point into Ontario brick & mortar banking.

Cheers,
Doug

gicjunkie said
Why exactly are we talking about an over 2 year old advertisement of a currently non-existent rate?  

What a downer. Mine is maturing next week at that rate , I was getting excited reading I could renew at that great rate. Yea it was indeed 2 years ago.