Canada Gazette, Part I, Volume 153, Number 11: By-law amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law and the Exemption from Deposit Insurance By-law (Notice to Depositors)
March 16, 2019
Statutory authority
Canada Deposit Insurance Corporation Act
Sponsoring agency
Canada Deposit Insurance Corporation
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the By-law.)
Background
The Canada Deposit Insurance Corporation Deposit Insurance Information By-law governs what member institutions of the Canada Deposit Insurance Corporation (CDIC) can say about their membership status and about the federal deposit insurance protection provided by the CDIC. The CDIC Board of Directors made the By-law on December 4, 1996, pursuant to paragraph 11(2)(f) of the Canada Deposit Insurance Corporation Act (CDIC Act). Paragraph 11(2)(f) of the CDIC Act authorizes the CDIC Board of Directors to make by-laws respecting representations by member institutions and other persons with respect to (i) what constitutes, or does not constitute, a deposit; (ii) what constitutes, or does not constitute, a deposit that is insured by the Corporation; and (iii) who is a member institution. The CDIC Board of Directors amended the By-law on November 26, 1997, September 29, 1999, December 1, 1999, October 10, 2001, December 6, 2006, March 3, 2016, and September 27, 2017.
The Exemption from Deposit Insurance By-law (Notice to Depositors) enables a federal member institution to opt out of deposit insurance coverage provided by the Canada Deposit Insurance Corporation. In order to receive authorization to opt out, a federal member institution must provide its depositors with notice in writing that their deposits will no longer be insured in whole or in part by the Corporation. The CDIC Board of Directors made the By-law on October 15, 1999, pursuant to paragraphs 11(2)(g) and 26.3(1)(c) of the CDIC Act. The CDIC Board of Directors amended the By-law on March 22, 2006, and April 6, 2008.
Issues
Amendments need to be made to the Canada Deposit Insurance Corporation Deposit Insurance Information By-law following the implementation of deposit insurance coverage changes introduced in Bill C-74, Budget Implementation Act, 2018, No. 1, as well as certain technical changes to provide clarity to the By-law. The provisions of Bill C-74, when proclaimed in force, remove the restriction that only deposits held in Canadian currency are eligible for CDIC coverage. As a result, amendments are necessary to reflect that warning statements can no longer indicate that foreign currency deposits and term deposits with a term to maturity greater than five years are not eligible for CDIC coverage. Several technical changes are also included to correct and clarify the placement of the CDIC badge on electronic business sites, and the manner for accessing information about a financial institution’s status as a CDIC member institution on the financial institution’s website.
Consequential amendments are also required to the Exemption from Deposit Insurance By-law (Notice to Depositors) to reflect the eligibility of foreign currency deposits for coverage, resulting from Bill C-74 when proclaimed into force. The amendments would have the effect that the acknowledgement pursuant to paragraph 2(a) would be in respect of foreign currency deposits as well as Canadian dollar deposits with the applicant; that any request for payment pursuant to paragraph 2(b) would be in respect of foreign currency deposits as well as Canadian dollar deposits; and that where a depositor does not provide the acknowledgement referred to in paragraph 2(a) or the request referred to in paragraph 2(b), the applicant’s liability in relation to foreign currency deposits as well as Canadian dollar deposits will be assumed by another member institution.
Objectives
The main objective of the Amending By-law is to make consequential amendments to the above-mentioned by-laws.
Description
The table below provides a description of the changes.
| Canada Deposit Insurance Corporation Deposit Insurance Information By-Law | ||
|---|---|---|
| Amending By-law Section | By-law Section | Rationale |
| 1 | 5(2) | Amendment clarifies that the membership sign in digital form must be displayed on the member institution’s website either directly on its homepage or via a single hyperlink that links to a section on the member institution’s website. |
| 2 | 7(1)(c) | Amendment clarifies that display of the badge on a page following log-on would only be required where the page permits transactions involving eligible deposits. |
| 3 | 9(2)(a) | Amendment repeals this section to reflect that warning statements can no longer indicate that foreign currency deposits and term deposits with a term to maturity greater than five years are not eligible for CDIC coverage. |
| 4 | 9.1(1) | Amendment repeals this section to reflect that warning statements can no longer indicate that foreign currency deposits and term deposits with a term to maturity greater than five years are not eligible for CDIC coverage. |
| Exemption from Deposit Insurance By-law (Notice to Depositors) | ||
| 5 | 2(a) to (c) | Amendments are required to ensure that the depositor’s acknowledgement, the depositor’s request for payment, or an assumption of liabilities by another member institution, would be in respect of Canadian dollar and foreign currency deposits. |
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there are no costs to small business.
Alternatives
There are no available alternatives. The amendments must be done by way of by-law.
Consultation
The CDIC has consulted extensively on the changes to the coverage framework that were part of Bill C-74. The proposed amendments are technical and only consultation by way of prepublication in the Canada Gazette, Part I, is necessary.
Rationale
The proposed Amending By-law will ensure the by-laws remain up to date and reflect the coverage framework that will apply upon the coming into force of select provisions of Bill C-74. The Amending By-law would achieve the stated objective and addresses the identified issues. The Amending By-law would not impose any additional regulatory costs or administrative burden on industry.
Implementation, enforcement and service standards
Sections 1 and 2 of the proposed Amending By-law would come into force on the day on which the Amending By-law is registered. Sections 3 to 5 of the proposed Amending By-law would come into effect on the day on which sections of Bill C-74 are proclaimed in force, unless this Amending By-law comes into force after that day, in which case those provisions would come into force on the day on which the Amending By-law is registered. There are no compliance or enforcement issues.
Contact
Noah Arshinoff
Manager
Insurance
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
Ottawa, Ontario
K1P 6L2
Telephone: 613‑995‑6548
Email: narshinoff@sadc.ca
PROPOSED REGULATORY TEXT
Notice is given that the Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(f) footnote a and (g) footnote b of the Canada Deposit Insurance Corporation Act footnote c, proposes to make the annexed By-law amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law and the Exemption from Deposit Insurance By-law (Notice to Depositors).
Interested persons may make representations concerning the proposed By-law within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Noah Arshinoff, Manager, Insurance, Canada Deposit Insurance Corporation, 50 O’Connor Street, Ottawa, Ontario K1P 6L2 (tel.: 613‑995‑6548; email: narshinoff@sadc.ca).
Ottawa, March 8, 2019
Peter Routledge
President and Chief Executive Officer
Canada Deposit Insurance Corporation
By-law amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law and the Exemption from Deposit Insurance By-law (Notice to Depositors)
Canada Deposit Insurance Corporation Deposit Insurance Information By-law
1 Subsection 5(2) of the Canada Deposit Insurance Corporation Deposit Insurance Information By-law footnote 1 is replaced by the following:
(2) A member institution shall display the membership sign in digital form on the home page of its website, either directly or by way of a single hyperlink that links to a page on the member institution’s website where information about its status as a member institution is available.
2 Paragraph 7(1)(c) of the By-law is replaced by the following:
- (c) the page where a depositor can make transactions involving deposits that are eligible to be insured by the Corporation after logging on; and
3 Paragraph 9(2)(a) of the By-law is repealed.
4 Subsection 9.1(1) of the By-law is repealed.
Exemption from Deposit Insurance By-law (Notice to Depositors)
5 Paragraphs 2(a) to (c) of the Exemption from Deposit Insurance By-law (Notice to Depositors) footnote 2 are replaced by the following:
- (a) that in order to keep their deposits that are payable in Canada with the applicant, they must provide the applicant with an acknowledgement in writing, in the form accompanying the notice, that those deposits will no longer be insured in whole or in part by the Corporation after the applicant receives authorization to accept deposits without being a member institution;
- (b) that at their request in writing, they will be paid the principal amount of their deposits that are payable in Canada and interest determined in accordance with the Exemption from Deposit Insurance By-law (Interest on Deposits); and
- (c) that if they do not provide the applicant with an acknowledgement referred to in paragraph (a) or submit a request referred to in paragraph (b), the applicant’s liability in relation to deposits that are payable in Canada will be assumed by another member institution on the same terms and conditions.
Coming into force
6 (1) This By-law, except sections 3 to 5, comes into force on the day on which it is registered.
(2) Sections 3 to 5 of this By-law come into force on the day on which section 203 of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada 2018, comes into force, but if this By-law is registered after that day, those sections come into force on the day on which this By-law is registered.