CDIC coverage of Simplii Financial products | Simplii Financial | Discussion forum

AlainJF, I agree the comparison chart is less useful when there are various generally-available promos out there, which there seem to have been in the last while, that the chart does not reflect. It's still useful for those who don't want to chase promos, just want to see what fi's regular rates are.
But I agree. Tangerine is another example where probably not many people are getting their 1% posted rate (I think it's that, I don't even check anymore because it's meaningless), everybody seems to be on one promo rate or another, and for existing money too. But I suppose that's what the Promos section here is for.

AlainJF said
I would like to suggest the "Comparison Chart" to include FI like Simplifii.

I do understand that the "Comparison Chart" has some rules, but I am not sure why Simplifii would not qualify to be included ?  

Good suggestion; however, they and Tangerine were on the comparison chart for many years and were even pioneers. However, their regular, posted rates are not deemed "competitive," a key criteria that Peter, myself and others helped to come up with many years ago. I've asked for further clarification or codification of what is deemed "competitive" but have been repeatedly shot down by other forum members, who would rather a more subjective approach that we currently have. My suggestion was for the something like 50 bps higher than the average of the "Big 5" banks' posted rates in their lowest savings account balance "tier" or the higher of their lowest "tier" and the one on balances over $5000, which would set 1.25% as a current "baseline" for inclusion into the chart. Nothing would change to the current chart members but it would further clarify, by definition, future additions/removals. 🙂

For a fuller list of virtual bank HISAs, google "CANNEX deposit rates" or I think Peter even has a link in the Chart's "footer". 🙂

It's also important to note: banks and credit unions NOT in the Chart are eligible for recommendation to create their own forum and/or bank/credit union profile page. For both, it's generally recommended that new account opening be available to all Canadians without attending a branch, excluding Quebec, but this isn't a requirement (i.e., Vancity, Servus Credit Union, Coast Capital Savings, etc.). Also, they are still eligible for the "promos" page if not listed in the Chart. We do this to minimize "chart bloat". Also, in terms of "pioneers," HSBC Direct was another Chart "pioneer" that was subsequently removed when HSBC (foolishly, looking back) removed that product availability.
🙁

Speaking of "chart bloat," with all of the myriad Manitoba and other credit unions now, it's already bigger than I'd like. So, while I would not support re-adding Simplii or Tangerine, I would support creating a line item labelled as National Virtual Banking Divisions of Manitoba-based Credit Unions with a clickable "down error" or "right-pointing arrow" that would expand to show all of the Manitoba-based credit unions. It should be minimized by default. Peter, would that be easy for you to do?

Hope that helps,
Doug

Loonie said
Speaking of which... can we not move HSBC forum and the several others who have nothing much to offer to a different area? It would reduce the clutter. People could still post to them if something newsworthy came up, and they could be moved back to prime time if suitable.

It seems like the criteria for getting on are more stringent than the ones for staying on.  

That's a good idea, but instead of just an "archived" forum. Perhaps a better category/sub-category system would be better or, we could simply close the HSBC forum and move all posts to "general financial discussion," which would automatically "bury" them as they are sorted by date. That's actually my preferred option when I think of it. Nothing saying they need a dedicated forum forever! 🙂

Cheers,
Doug

Loonie said
It would be harder to retrieve them though from General if they came back to life. Some historical perspective is often useful in that circumstance.  

Not if people actually searched before they posted or, heck, what's so wrong with starting a new thread on the same topic? Why does RedFlagDeals, and even this forum, insist on having 10+, 20+ or even 50+ pages of a thread with 15-20 posts per page!? Makes it far too daunting for new forum user. 🙁

Another option is an "auto-suggest" feature when you go to post a new thread, where it suggests an existing thread you may want to attach your post to. 🙂

Peter knows my opinions on Simple:Press and I'm not really a fan. I find it's too "old school" and a bit "too clunky" in terms of usability. I much prefer the likes of, in this order:
- Vanilla Forums;
- bbPress;
- phpBB; or,
- Invision Power Board (if it still exists)

Cheers,
Doug

Loonie said
I have no sophistication in these matters,just like to keep it simple and functional.
Search function does not always get me what I'm looking for. I find this mysterious.
I am grateful that the chaos at RFD has not (yet) invaded this forum. I rarely look at it for that reason, with its endless pages of people asking the same questions over and over again and making the same comments and often in an uncivil tone. They would do the same thing if the thread were long or short, I have no doubt. On the whole, I prefer one longer thread than 20 shorter ones. If I really want to dig for something, I will go through all the pages, which is easier than looking at more threads. If not, I can just look at the current ones.

Anyway, we are off topic here. Belongs in Site Suggestions.  

Fair enough but I'm also not that dogmatic, either, in terms of a bit OT conversation in a thread, so long as it doesn't completely morph into a whole page (or more) of OT conversations. I don't think we need to split these 2-3 posts into a separate thread but I'll just close by saying I agree with you in that I, too, prefer threads that are no more than, say, 5 pages or 60 total posts (assuming 15 posts per page). 🙂

Cheers,
Doug

rfdm4g4g9 said
Would you keep $ 320,000 in Simplii ? CDIC coverage is only $ 100 K.

Tangerine & Scotia are listed as 2 separate banks under CDIC coverage on CDIC website.

But Simplii is not even listed on the CDIC website. Only CIBC is listed on the CDIC website.

Is it because Simplii is just considered as a Financial division of CIBC & not really a separate bank, hence the coverage is same for both.

If that's the case does keeping $ 320 K in Simplii exactly the same as keeping $ 320 K in CIBC from bank size & security point of view ?

I don't mind keeping $ 320 K with CIBC, even though CDIC coverage is only $ 100 K , as what are the chances of a bank like CIBC going under ? They are too big to fail, Canadian government won't allow it with any of the Big 5 banks. But their subsidiaries , I am not so sure.

But if Simplii is operated as a totally separate bank than CIBC, I would hesitate to keep $ 320 K with them, as Simplii is much smaller.

If someone tells me keeping $ 320 K in Simplii is exactly the same as keeping $ 320 K in CIBC, security & CDIC coverage wise, I will go ahead.

But if someone says, no its 2 different things, and CDIC & Government treats them differently, one as a bigger bank and the other as a smaller separate bank, I would hesitate a lot .

Thoughts ?  

You are correct in your first assumption/reasoning. Simplii Financial is indeed a division, a branch transit really, of CIBC and, while you cannot access your accounts at a CIBC branch in-person and a CIBC branch representative cannot physically service your accounts in any way, the CDIC coverage would be under the same terms for any accounts you have with CIBC and with Simplii Financial.

Observe:
John is a single, 37-year-old male and has chequing and savings accounts with Simplii Financial because he doesn't like paying fees. He has $60,000 in his HISA and (roughly) $1000 in his chequing account. He also has a index mutual fund RRSP through Simplii Financial's mutual fund dealer, CIBC Investor Services Inc., that is branded as Simplii Financial, containing his retirement assets of approximately $176,000, none of which is CDIC insured of course because of what's in it (i.e., mutual funds).

He also has a customer profile with CIBC where he has two non-registered GICs because of the better rates they had at the time than Simplii Financial and savings account where he can redeem any proceeds. The amount in the savings account is negligible really but amounts to $100.00. 1 GIC is coded (i.e., product code and account/transit number) as Canadian Imperial Bank of Commerce for $50,000 and the other is for $25,000 coded as CIBC Mortgage Corporation but within the same online banking profile. He also has a TFSA with about $48,000 invested in a variety of asset classes with CIBC's Investor Edge discount brokerage, also not CDIC insured.

Let's recap John's assets with each banking group:
Simplii Financial - $237,000, including $61,000 in chequing and savings accounts and the uninsured $176,000 mutual fund RRSP.

CIBC - $173,100, including $50,100 in CIBC savings & GIC accounts, $75,000 in a CIBC Mortgage Corp. GIC and $48,000 in a CIBC Investor's Edge TFSA (uninsured).

Calculate his CDIC coverage on CDIC eligible products:
CIBC & Simplii Financial - $100,000 of his combined $111,100
CIBC Mortgage Corp. - Full $75,000 GIC (plus accrued interest, of course, to applicable CDIC limit for the issuer)

Total Combined Insured versus Uninsured Deposits:
$175,000 of total individual assets across all CIBC companies and product lines of would be insured, $11,100 CIBC CDIC-eligible deposit products uninsured and $224,000 in non-CDIC insurable assets.
Total assets for the CIBC group of companies for this individual, $410,100, across all product lines and companies.

Simply put, it doesn't matter where you would keep your deposits (i.e., Simplii or CDIC). What matters is the beneficial ownership of the deposits in terms of deposit eligibility. If you are comfortable with $6,000,000 in CDIC insured deposits with CIBC, and I would be too if they had decent rates, then you could have $6,000,000 with the same CDIC insured deposits at Simplii Financial.

Remember, CDIC limits are determined first by issuer and further clarified/defined by beneficial ownership.
- Assets held in sole name by Sid Blumenthal with CDIC member XYZ Bank - $100,000
- Assets held jointly by Sid Blumenthal and his common-law partner Joanne Gartner with XYZ Bank - $100,000
- Assets held jointly by Sid Blumenthal or his common-law partner Joanne Gartner and some other person(s) with XYZ Bank, $100,000 for each set of joint owners with the issuer
- Assets held jointly by Sid Blumenthal with XYZ Bank in an RRSP/RRIF - $100,000
- Assets held in sole name (or joint name, as applicable) with XYZ Bank's federally regulated CDIC member trust company, XYZ Trust Co. - $100,000
- Assets held in sole name (or joint name, as applicable) with XYZ Bank in trust in a property tax account for payment of property taxes if he holds a mortgage - $100,000
- Assets held by Sidney Blumenthal in trust for someone else - $100,000 (*check with your bank to ensure proper notations and personal details on all responsible owners is detailed, however. A trust deed is recommended but not required. If the bank has just noted "ITF Sidney Blumenthal Jr" in the account's short name, as an example, that may not be good enough)

TFSAs, unless it's changed since I left HSBC in 2013, are considered with one's sole assets limit.

Edit: It would appear TFSAs now have their own CDIC limit, according to CDIC's calculator, which is positive. (I see they redesigned the website - finally have they have a decent website design and logo again! :). I wonder when this changed?

Also, RRIFs are technically insured separately from RRSPs but, practically, other than for maybe 5 years, you would not be able to have a RRIF and an RRSP simultaneously.

Cheers,
Doug

rfdm4g4g9 said

Cool Thanks.

Yes looks like keeping money in Simplii is exactly the same as keeping money in CIBC. CDIC insurance won't really consider them as separate banks or Simplii as a wholly owned subsidiary of CIBC, but it will consider Simplii as CIBC itself.

That's correct. In the eyes of CDIC, they don't care about multiple banking "brands" that operate under different branch transits of a given CDIC member institution. It can be confusing at first but once you realize what's going on and how it works, you're well informed and it makes sense. 🙂

Tangerine & Scotia, seems to be a bit different - although Tangerine is owned by Scotia..wholly owned subsidiary of Scotia.

Not "a bit different," they are totally different. Think of it this way: Tangerine Bank is the legal entity that, while it is wholly owned by another CDIC member directly (The Bank of Nova Scotia), it pays separate CDIC deposit premiums and fees to CDIC every year. Unlike OSFI, CDIC does not care who a bank's shareholder(s) is(are). If Scotiabank were to transition Tangerine Bank to a separate branch transit and "brand," then transitional CDIC insurance coverage would apply temporarily when two CDIC members amalgamate (as was the case when RedBrick Bank amalgamated with CFF Bank that ultimately became Home Bank or when Prospera Credit Union sold its Ubiquity Bank of Canada to Bank West that ultimately became Zag Bank - separate CDIC limits were maintained for a short period of time and then one limit was in place). 🙂

To give you an idea of the list of CDIC members that Scotiabank owns, here's a list that I believe to be exhaustive (as at Nov 25, 2017):
- ADS Canadian Bank (wholly-owned subsidiary)
- The Bank of Nova Scotia (parent company)
- Montreal Trust Co. of Canada (wholly-owned subsidiary)
- National Trust Co. (wholly-owned subsidiary) not to be confused with either Natcan Trust Co. or National Bank Trust Inc., which are wholly-owned by National Bank of Canada
- Scotia Mortgage Corp. (wholly-owned subsidiary)
- Tangerine Bank (wholly-owned subsidiary)

It also owns The Bank of Nova Scotia Trust Co. but that's not a CDIC member as it doesn't accept deposits. It administers and custodies registered plans, typing for its parent company and related affiliates.

I mean for Simplii to go under, CIBC has to go under too. You won't have a situation, where Simplii goes under & CIBC remains intact, since both are considered to be one & the same by CDIC, Government, Investors, Public etc.

Correct but it's not really all that relevant. CIBC could also sell its Simplii Financial division's assets and depositors to another financial institution, which would trigger the aforementioned temporary dual CDIC limits that result from member institutions amalgamating. If CIBC "went down," as you worded it, completely, CDIC has neither the funds on its books nor its authorized borrowing limit to repay depositors claims so it would force the sale of its assets and deposits to one or more member institutions, in which case there'd be no claim on CDIC. I'd also add, though, that if a bank as large as CIBC "went down," the country is in a lot of trouble. Regulators would not let it get to that situation. And if it did, the country is most likely undergoing massive hyperinflation, civil warfare, uprisings, hoarding of food, runs on banks and a rush to convert fiat currency (i.e., paper money) in to gold before it's too late. Don't worry about this impossibly unlikely scenario. 😉

They ( Gov. or CDIC ) can't treat Simplii as a Step child & cut ties with it and allow it to fail, in case of a huge global/Canadian Financial crisis, by saying lets keep CIBC as its too big to fail, but lets allow Simplii & its depositors/accounts to go under as its smaller/less assets/less depositors.

No, it wouldn't happen like that. Don't try and think in those terms.

But in Scotia & Tangerine's case - Tangerine can go under & Scotia remains intact, or vice versa. They can throw Tangerine under the bus & keep Scotia intact, in case of a huge financial crisis, the way we had in USA in 2008 during the sub prime mortgage fiasco when Lehman Brothers, Bear Stearns etc went under.

No, not practically, CDIC would not allow Scotiabank to let Tangerine "fail" as its common stockholder. It's not like an unregulated company writing off a subsidiary. CDIC would have claims to Scotiabank's assets. So, no, that would not happen. Scotiabank is responsible and severally liable for Tangerine Bank, even though it's a separate CDIC member. Basically, CDIC gets the "best of both worlds" in a way - it collects dual premiums and fees from both members but then both institutions would have to fail before it'd have to pay out, assuming no other institution took on their assets and liabilities. Does that make sense?

Scotia is too big to fail & government will bail them out with tax payers money in case of a huge financial crisis, but not too sure of Tangerine being bailed out - if they are considered as 2 separate banks/entities.  

Again, I really shouldn't indulge in this but, again, it would not happen like this. Scotiabank would be severally liable for Tangerine's assets and liabilities even though they're separate CDIC members. It's basically a "win-win" for CDIC, as discussed earlier.

Cheers,
Doug