Financial industry

Question 1

Which authority protects investors from unfair, improper or fraudulent practices and fosters fair and efficient capital markers and reduces risks to the market’s integrity and to investor confidence in the markets through a national system of harmonized securities regulation, policy and practice?

Answer 1

The Canadian Securities Administrators (CSA) which consist of 13 provincial/territorial Canadian securities regulatory authorities

Question 2

List 3 objectives of securities legislation.

Answer 2

1. Investor protection
2. Fair access to markets
3. Reduction of systemic risk

Question 3

What are self regulatory organizations (SROs) responsible for?

Answer 3

SROs are responsible for ensuring that their members meet the standards prescribed by provincial laws governing securities.

They regulate markets and trading and member firms and employees and business practices

Question 4

What is IIROC?

Answer 4

IIROC - the investment industry regulatory organization of Canada is the national SRO overseeing all investment dealers and trading activity on equity and debt marketplaces in Canada

Question 5

What is the mutual fund dealers association (MFDA)?

Answer 5

MFDA is a not for profit federal corporation that acts as an SRO for mutual fund dealers in Canada

Question 6

When must advisors deliver a mutual funds’s fund facts document (FFD)?

Answer 6

Before a client purchases a mutual fund

Question 7

When do investors have the right to withdraw from any purchase under a prospectus?

Answer 7

2 days after they receive the prospectus

Question 8

What are the basic two exceptions in which a fund facts disclosure does not have to be delivered to a client?

Answer 8

When a client is purchasing a mutual fund on a systematic, recurring basis eg a PAC plan.

When a client invests in a managed solution that includes ongoing purchases, rebalancing and subsequent purchases

Question 9

What is a prospectus?

Answer 9

A prospectus is a detailed disclosure document that must by law provide full, true and plan disclosure of material facts

Question 10

What is the Office of the Superintendent of Financial Institutions (OSFI) responsible for?

Answer 10

OFSI is responsible for regulating and supervising all banks, all federally incorporated or registered insurance, trust and loan companies, cooperative credit associations, fraternal benefit societies and federally regulated pensions.

Its mission is to safeguard policyholders and depositors and plan pension members from undue loss.

It’s supervision involves assessing the safety and financial soundness of financial institutions on an ongoing basis.

Question 11

What are the two main broad functions of OFSI?

Answer 11

Regulation and supervision

Question 12

What is the Financial Consumer Agency of Canada (FCAC)?

Answer 12

FCAC is an independent federal agency working to protect and educate consumers of financial services.

Question 13

What are the two key responsibilities of FCAC?

Answer 13

Consumer protection and consumer education

Question 14

What is the mandate of the Canadian Council of Insurance Regulators (CCIR)?

Answer 14

CCIR’s mandate is to facilitate and promote an effective regulatory stem in Canada to serve public interest.

It works with other financial service regulators to develop and harmonize insurance policy and regulation across jurisdictions.

Question 15

What is the Canadian Association of Pension Supervisory Authorities (CAPSA)?

Answer 15

CAPSA is a national inter-jurisdictional association of pension supervisory authorities.

Its mission is to facilitate an efficient and effective pension regulatory system in Canada.

Question 16

What is the mandate of the Joint Forum of Financial Market Regulators (Joint Forum)?

Answer 16

The Joint Forum was founded to address issues of common interest arising from the growing integration of the financial services sector.

Its mandate is to proactively facilitate and coordinate the development of harmonized, cross-sectoral and cross-jurisdictional solutions to financial services regulatory harmonization.

Question 17

What is the Canadian Investor Protector Fund (CIPF)?

Answer 17

CPIF is a private trust fund established to protect customers in the event of the insolvency of a member

Question 18

Are financial planners members of these SROs?

Answer 18

No

Question 19

What are general accounts?

Answer 19

General accounts are accounts of a customer such a cash, margin, short sale, options, futures and foreign currency are combined are treated as one general account.

In addition the proportionate interest of a customer in an account that is held on a joint or shared ownership basis is combined with the general account of the customer

Question 20

What are separate accounts?

Answer 20

Separate accounts are accounts that are treated as if they belonged to a separate customer.

They include RRSPs, RRIFs, LIFs, LIRAs, LRIFs, RESPs, testamentary trusts, inter vivos trusts, personal holding corporation accounts, partnerships and unincorporated associations or organizations

Separate accounts are not combined with other separate accounts unless a customer holds them in the same capacity or in the same circumstances.

Question 21

What is the Canada Deposit Insurance Corporation (CDIC)?

Answer 21

The CDIC is a federal crown corporation created to insure deposits in banks, trust companies, loan companies against loss in case of member failure.

Question 22

What are the types of deposits eligible for insurance under CDIC?

Answer 22

Chequing and savings accounts 
Money orders
Certified drafts and cheques 
Travellers cheques issued by members
Debentures issued by loan companies
Term deposits with 5 years or less 
Savings held for paying realty taxes on mortgage properties 

To be eligible for coverage, deposits must be payable in Canada and in Canadian currency

Question 23

What are the other types of products not covered under CDIC?

Answer 23

Foreign currency deposits (US dollar accounts)
Term deposits greater than 5 years
Debentures by chartered banks
Bonds and debentures issued by governments and corporations
Treasury bills
Investments in stocks, mutual funds or mortgages

Question 24

What is the CDIC coverage amount for deposits?

Answer 24

Basic protection for eligible deposits is $100,000 per depositor

Deposits at different branch offices of the same institution are combined for $100,000

Accounts owned individually in the name of the depositor are combined for $100,000 per member institution (includes RESPs)

CIDC offers separate protection for deposits in joint accounts, deposits held in trust, TFSAs and RRIFs

Deposits held as joint ownership are insured separately from deposits held in the individual’s sole name

Deposits held in trust are insured separately from deposits owned individually by the trustee or beneficiary- $100K is combined for all trusts with same trustee and beneficiary.

Separate limits for different trustee and beneficiary

If a trust has more than one beneficiary then each beneficiary is insured separately up to $100,000

Question 25

What type of investments in an RRSP, RRIF or TFSA are insured with CDIC coverage?

Answer 25

Amounts held in savings accounts or term deposits of 5 years or less and payable in Canadian currency.

Question 26

Would a mutual fund held in a TFSA, RRSP, or RRIF be covered under CDIC protection?

Answer 26

No

Question 27

How is the coverage for CDIC for each eligible deposit held in TFSAs or RRSPs with the same member institution?

Answer 27

$100,000 applies separately to eligible deposits held in TFSAs and RRSPs and RRIFs with the same member institution (principal & interest combined)

Question 28

Do depositors have to apply for CDIC insurance?

Answer 28

No, all eligible deposits are automatically protected.

All claims are automatically processed. Normal timeline for payments is 2 months.

Question 29

What is Assuris?

Answer 29

Assuris is a private not for profit corporation established by the Canadian life insurance industry to provide protection for policyholders against loss of benefits due to financial failure of member company.

It facilitates the transfer of a policy to a solvent company and ensures continuity of benefits under original terms of the policy.

Question 30

Do policyholders need to apply for protection?

Answer 30

No, it’s automatic

Question 31

When do life insurance companies become members of Assuris?

Answer 31

When they get licensed. In order to become licensed to issue policies in Canada, they are required to become members of Assuris.

Question 32

What is the Assuris coverage for payout annuity, long term care, disability insurance - monthly income amount

Answer 32

$2000 or 85% of promised benefits whichever is higher

Question 33

What is the Assuris coverage for segregated fund - guaranteed amount?

Answer 33

$60,000 or 85% of promised benefits whichever is higher

Question 34

What is the Assuris coverage for critical illness, travel, or medical insurance - health expense?

Answer 34

$60,000 or 85% of promised benefits which is higher

Question 35

What is the Assuris coverage for life insurance - death benefit and life insurance - cash value?

Answer 35

Death benefit - $200,000 or 85% of benefit whichever is higher

Cash value - $60,000 or 85% whichever is higher

Question 36

What is the Assuris coverage for accumulation annuity - accumulated value?

Answer 36

100% up to $100,000

Question 37

With regards to a segregated fund, does Assuris protection apply if the value exceeds the guaranteed amount?

Answer 37

No