1.03 - Consumer Protection Organizations

Question 1

What are the 6 major organizations that protect consumers against losses from failed financial institutions?

Answer 1

1) MFDA IPC - Mutual Fund Dealers Association Investor Protection Corporation; 2) CIPF - Canadian Investor Protection Fund; 3) CDIC - Canada Deposit Insurance Corporation; 4) Assuris; 5) Property and Casualty Insurance Compensation Corporation; 6) Credit union deposit protection organization

Question 2

What is the MFDA IPC and what is its role?

Answer 2

MFDA IPC = Mutual Fund Dealers Association Investor Protection Corporation. The MFDA IPC is a not for profit corporation that protects investors from losses due to insolvency of a MFDA member.

Question 3

What is the maximum combined coverage, and how is it broken up for investors protected by the MFDA IPC?

Answer 3

The maximum coverage is 2M, up to 1M for all general accounts and up to 1M for registered accounts.

Question 4

What are the two outcomes at the end of an MFDA IPC claim, and how long does a consumer have to decide?

Answer 4

Within 180 days, a consumer must either accept the payment / settlement or take control of the securities.

Question 5

What is the CIPF and what role does it play?

Answer 5

CIPF = Canadian Investor Protection Fund. The CPIF is a private trust-fund to protect clients of members who become insolvent due to bankruptcy. It is paid for by member contributions and administered through the SRO.

Question 6

What are the coverage limits of the CIPF?

Answer 6

The CIPF provides 1M combined total coverage for general accounts, and up to 1M for each separate account, unless held in the same capacity or the same circumstances (ie multiple RRSPs for one customer is combined; 1 RRSP and 1 LIRA is combined; 1 RRSP and 1 TFSA is not combined)

Question 7

How long does a customer have to file a claim with the CIPF?

Answer 7

180 days.

Question 8

What is the CDIC and what role does it play?

Answer 8

CIDC = Canadian Deposit Insurance Corporation. It insures deposits held in federally regulated FIs against loss due to member failure, and is 100% financed by member contributions.

Question 9

What 8 primary instruments are covered under CDIC insurance?

Answer 9

1) Savings accounts; 2) checking accounts; 3) money orders; 4) certified cheques / drafts; 5) travellers cheques; 6) debentures; 7) term deposits (less than 5 years); 8) savings for realty taxes

Question 10

What are 6 primary exclusions for CDIC coverage?

Answer 10

1) Foreign currency deposits; 2) term deposits greater than 5 years; 3) debentures (chartered banks); 4) corporate / government bonds / debentures; 5) treasury bills; 6) investments in stocks, mutual funds, mortgages

Question 11

What are the limitations to coverage for CDIC insurance?

Answer 11

Maximum coverage is up to 100K per depositor, per institution.

Question 12

What are 5 examples of deposit / cash accounts that have separate coverage arrangements under the CDIC?

Answer 12

1) Joint accounts; 2) trust accounts; 3) RRSPs; 4) TFSAs; 5) RRIFS

Question 13

What is Assuris?

Answer 13

Assuris is a private, not-for-profit, established by Canadian life insurance industry to protect policy holders by transferring policies to another institution under the original policy terms.

Question 14

What are the 5 benefit types protected by Assuris?

Answer 14

1) Segregated funds (mutual fund with life insurance); 2) life insurance (death benefit); 3) accumulation annuities (GICs); 4) payout annuities, long-term care of disability insurance (income); 5) critical illness, travel or medical insurance (health)

Question 15

What are the Assuris coverage limits for segregated funds?

Answer 15

The greater of 60K or 85% of the guaranteed amount

Question 16

What are the Assuris coverage limits for life insurance?

Answer 16

The greater of 200K or 85% of death benefit, and the greater of 60K cash value or 85% of promised benefits

Question 17

What are the Assuris coverage limits for accumulation annuities?

Answer 17

100% of accumulated value, up to 100K

Question 18

What are the Assuris coverage limits for payout annuities, long-term care or disability insurance?

Answer 18

The greater of 2K monthly or 85% of promised benefits

Question 19

What are the Assuris coverage limits for critical illness, travel or medical insurance?

Answer 19

The greater of 60K or 85% of the health expense

Question 20

What are the 6 Assuris coverage categories for the purposes of calculating coverage limits with the same carrier?

Answer 20

1) Individual non-registered benefits (ie. life, disability, etc.); 2) Individual registered (ie. RRSP, RRIF, etc.); 3) Individual TFSAs; 4) Group non-registered benefits (ie. life, disability, etc.); 5) Group registered benefits (ie. group RRSP, pensions, etc.); 6) Group TFSAs

Question 21

What is the PACICC and what is its role?

Answer 21

PACICC - Property and Casualty Insurance Compensation Corporation. The PACICC is a private, not for profit that provides reasonable recovery for policyholders of a property and casualty insurance company.

Question 22

Why does the PACICC only covers claims-in-flight on or before the court orders the dissolution of an insurance company?

Answer 22

For policy holders without an open claim, it is expected they would immediately replace the policy at another insurance company.

Question 23

Which provinces auto policies are not covered under the PACICC and why?

Answer 23

MB, BC, SK because they are covered by government programs

Question 24

What are the coverage limitations of the PACICC?

Answer 24

250K for auto and commercial and 300K for personal property, per occurrence