CDIC QUESTIONS AND ANSWERS – ABBREVIATED BROCHURE
There have been many questions asked by our members regarding the CDIC disclosure requirements which recently came into force. We have reached out to CDIC for clarity and have provided a summary of the questions and the responses we received from CDIC below for your reference.
Please note that the abbreviated form of the brochure can be found HERE or in our member’s area of our website.
Question: Do we have to send a disclosure for every GIC Product?
Regarding disclosures when clients purchase a GIC, there is an important distinction to make for brokered deposits. In the case of a trust deposit (e.g., where a broker is holding deposits as trustee for its clients), the broker is the depositor. The CDIC member institution is therefore required to provide the abbreviated version of the CDIC brochure to the broker, as part of the broker’s account opening process. There is no requirement on the broker (as the depositor) to provide the abbreviated brochure onwards to the client, however they are not precluded from doing so. If brokers opt to provide the abbreviated version of the CDIC brochure to their clients, it must not result in the broker making a false, misleading or deceptive representation with respect to what constitutes or does not constitute a deposit, what constitutes or does not constitute a deposit that is insured by CDIC, or who is a member institution. For more information, please refer to page 12 of the information bulletin.
Question: Is the requirement to include it with every deposit application including renewals, or simply the first for that client with that Member Institution?
The general rule is that even if a person has other accounts with the member, if a customer opens another account in respect of an eligible deposit, the member must provide the abbreviated brochure together with the account opening documents. Where a customer merely enters into a transaction to purchase another eligible product for placement in its account (or makes a new deposit in an existing deposit account), the member is not expected to provide the abbreviated brochure. In simpler terms, if it’s a new account, they need to provide the brochure. If it’s a new product being placed in an existing account, no need to provide the brochure.
- The RDBA recommends that a ‘best practice’ would be for our Deposit Broker members to provide the abbreviated brochure whenever a new account is opened with a CDIC member Financial Institution.
Question: Can I have permission to put the CDIC logo on my website?
Sections 4-9 of the By-law contemplate how and where a member institution may make statements about its membership status in advertisements and include requirements related to the CDIC membership sign, the CDIC brochure, the CDIC badge, and warning statements.
It is a crucial element of the By-law that representations about CDIC not be misleading or lead to depositor confusion. Unless a non-member has unrestricted ability to bind a member institution, we would advise against the use of the CDIC membership sign on your website on the basis that it could/would cause confusion and may mislead depositors into thinking a non-member is a member institution. For further information on these restrictions, please see pages 5-10 of the information bulletin.
Question: At what point the account (client name GIC purchase) is considered opened?
A) The CDIC Deposit Insurance Information By-law requires a member to provide the depositor with the abbreviated brochure as part of the account opening process. In the case of a trust deposit (e.g., where a broker is holding deposits as trustee for its clients), the broker is the depositor. The member is therefore required to provide the abbreviated version of the CDIC brochure to the broker, as part of the broker’s account opening process. Where the broker acts as agent and acquires the GIC in the name of the customer, the member (or the broker on the member’s behalf) is required to provide the customer (in that case the depositor with the member) with the abbreviated brochure.
The requirement is that the abbreviated brochure is provided as part of the account opening process. The abbreviated brochure may be provided to the depositor together with the member’s provision of the instrument evidencing that the member institution has received or is holding money that constitutes a deposit, but it may also be provided during any other time during the account opening process (e.g., the discussion of or signing of the paperwork).
Note that nominee Brokers are not precluded from providing a copy of the abbreviated version of the CDIC brochure to their clients, provided that doing so does not result in the broker making a false, misleading or deceptive representation with respect to what constitutes or does not constitute a deposit, what constitutes or does not constitute a deposit that is insured by CDIC, or who is a member institution.
Question: Will CDIC supply us with the paper and toner used as copying the purple part is expensive use of toner?
With regards to printing, CDIC only provides a digital version of the abbreviated brochure. This document is in a printable 1 page format, and since CDIC does not require Brokers to make disclosures, it does not provide paper, ink or postage.
- CDIC has developed low-ink consumption versions of the brochure, which is also available on the CDIC website.