How Safe Is Your Canadian Money?

How Safe Is Your Canadian Money?

Through much of the financial crisis we hear of banks going bankrupt and homes being foreclosed and people losing their jobs. With all of the uncertainty the question "is my money safe?" will likely come up. Through various regulatory bodies and measures the savings and investments of Canadians are safe.

Canadian Deposit Insurance Corporation (CDIC)

The CDIC was created to provide individuals with insurance on their deposits with banking institutions in the event that the bank goes bankrupt. The CDIC will insure deposits up to $100,000.00 in the event of one of these failures. Most all chequing and savings accounts are covered. A few exceptions to note are GICs that have a term longer than 5 years and any bank accounts that held is foreign currency (ie: US$ accounts).

In its history the CDIC has had to deal with several bankruptcy cases and paid out several million dollars to people who had accounts with them. They presently insure approximately $500 billion in accounts across Canada.

Credit Union Deposit Insurance Corporation

Similar to the CDIC are the Credit Union Deposit Insurance Corporations. In each province there exists a similar body that provides deposit protection to individuals who hold accounts with Credit Unions. In general, the terms of insurance are the same as the Federal level CDIC with a maximum insurable level of $100,000 per eligible account.

Canadian Investor Protection Fund (CIPF)

The CIPF exists, much in the same way as the CDIC, as consumer protection in the event of an investment institution going bankrupt. The fund also provides oversight to the self-regulatory system of the Investment Industry and Stock Exchanges.

Each account is covered up to a maximum of $1 million in the case of investment dealer insolvency. This insurance does not cover any losses that occur as a result of market declines or other actions taken on the part of the individual. The accounts covered are both general and separate. General accounts are all non-registered accounts held within one CIPF member institution. A separate account would be if a registered account such as an RRSP, TFSA, or RESP were being held under the same name. It would be entitled to separate CIPF coverage.

Mutual Fund Dealers Association Investor Protection Corporation (MFDA IPC)

Much like all the previously mentioned organizations the MFDA IPC has been established to provide consumer protection in the event of a bankruptcy of a Mutual Fund Dealer. The specifics regarding account coverage and amount of eligibility are identical to the CIPF, $1,000,000 per account. The one difference to note is that at present there is no regulatory coverage in the province of Quebec.

As you can see your money is fairly well protected when invested in Canadian institutions. Although there will always be volatility in investments and banks may come and go, your money should be safe. With these organizations working to protect the consumer your money will continue to be safe and will allow you to use it to its full capacity whether saving or investing.