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CIBC GIC Changes
March 6, 2023
5:52 am
bhuc
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We're making changes to your Personal Non-Registered GIC Account Agreement and Terms and Conditions...

If you don't accept the the changes ... you may close your account without penalty.CIBC-changes.jpeg

If you're locked into a long term GIC with CIBC and want out without penalty this maybe the answer !

March 6, 2023
6:03 am
savemoresaveoften
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very good exit strategy for those off mkt GIC rates ! 2 thumbs up !

March 6, 2023
12:46 pm
Canadianbull
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What is the reason behind the change?

March 6, 2023
6:10 pm
Loonie
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What are the changes?

March 7, 2023
4:02 am
bhuc
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If you own a Personal Non-Registered GIC you have probably recieved the notice by snail mail which outlines all of the proposed changes.
Whats's intersting is that the new agreement and T&C are not available for viewing until April 16.

There is one section in the notice that basically says CIBC can change anything about your agreement at anytime and allows you to cancel your GIC without penaltly or cost if you do not agree with the changes within 30 days of notification of pending changes.

This leads me to think anyone could cancel ther existing Personal Non-Registered GIC if they don't agree with any of the propsed changes.

I will be talking to my Fin Rep at CIBC shortly so stay tuned for updates.

March 7, 2023
3:44 pm
Loonie
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I don't have a GIC with CIBC, so didn't get the notice. Thanks for the additional info.

I find it very concerning that a FI can change the terms of a GIC, and your only recourse is to let go of it.
Does this mean that when rates go down, they can lower your rate? Frankly, it appears that it does. They may say that wouldn't happen... until it does. I'd ask for that protection in writing.

March 7, 2023
4:29 pm
JenE
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The changes made by CIBC may be the beginning of all the banks changing their terms and conditions. I purchased a 5 year TFSA GIC from Motusbank in late January. When I printed off the certificate I read on the back that:
“motusbank can add to or change the terms and conditions of this Agreement from time to time, but motusbank will give at least 30 days’ notice of any such additional or amended terms and conditions and impacts on interest payable (my italics). We may change these Account Terms at any time, and any changes communicated to you at least 30 days before they take effect. Notice of changes to the Account Terms may be distributed through our statements, letters and/or posted on the motusbank website. If you access or have funds on deposit in any Account at motusbank after the effective date of the change, you automatically accept the change.”

If I’m interpreting the above correctly then a “5 year Guarantee” means nothing. Hopefully I’m mistaken.

I’ve repeatedly asked for their legal department to contact me, to no avail. I was informed, however, that I could write to the Ombudsman.

I checked my Meridian GIC certificate of 3 years and it didn’t have the “Get out of jail free” spiel. Maybe the more recent ones will.

I find this all very stressful. Any opinions, anyone?

March 7, 2023
5:16 pm
bhuc
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My Fin Rep at CIBC emailed this to me.

"I have reviewed the changes to the GIC agreement and was given some clarity from backoffice regarding what can be done. If you do not accept the changes from April 16th to May 16th you are able to cash out your GICs and get the principal and interest prorated. If this is the case, you will have to cash the certificate and take the funds elsewhere."

The kicker is, the Agreement and terms and conditions are not available for viewing until April 16, 2023.

I still don't know if I accept the proposed "GIC Agreement changes", can CIBC can change my existing GIC term or Interest Rate at their discretion ?

March 7, 2023
7:28 pm
savemoresaveoften
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bhuc said
My Fin Rep at CIBC emailed this to me.

"I have reviewed the changes to the GIC agreement and was given some clarity from backoffice regarding what can be done. If you do not accept the changes from April 16th to May 16th you are able to cash out your GICs and get the principal and interest prorated. If this is the case, you will have to cash the certificate and take the funds elsewhere."

The kicker is, the Agreement and terms and conditions are not available for viewing until April 16, 2023.

I still don't know if I accept the proposed "GIC Agreement changes", can CIBC can change my existing GIC term or Interest Rate at their discretion ?  

GIC is a term deposit, and both parties agreed to the fixed rate. If the agreement change will now give CIBC the right to change the rate of an existing GIC, rest assure no one will ever buy a CIBC GIC ever again.

March 19, 2023
9:20 am
FCM
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My advisor says the same thing. This seems like a bail-in of GIC obligations when CIBC wants to get out of its higher rate commitments.

March 19, 2023
2:25 pm
Lodown
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bhuc said

I still don't know if I accept the proposed "GIC Agreement changes", can CIBC can change my existing GIC term or Interest Rate at their discretion ?  

You should ask CIBC precisely this question and get it in writing if they say they cannot change the Interest rate and term.

March 19, 2023
3:14 pm
Loonie
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Considering the blanket unilateral permission to change terms and the non-responses thus far from CIBC and motusbank, it kind of sounds like the banks are preparing themselves for the possibility of bank failures. Such failures would likely be systemic, i.e. throughout the sector, in order to potentially trigger such drastic action as changes in GIC terms; I don't think they would have a reason to invoke this provision for anything less than their own self-preservation, considering the likely reaction from their clients.

Rest assured though that the bank's self-preservation will always rank higher in their calculations than yours, depending on what they can get away with legally.

This probably requires a contracts lawyer for comment as to what they can legally get away with.

March 19, 2023
5:02 pm
Bill
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Instead of assuming GIC contracts have fundamentally changed I'm guessing (GUESSING!) this is what it is: Governments require continual increased hand-holding by FIs to make sure people are a million % informed of every possible pitfall of the investment they're buying, the account they're opening, etc. Because grown-ups are no longer responsible for their actions, it's always someone else's doing, so FIs are probably now required that if they make even the tiniest administrative change to their GIC contracts during the time you hold a GIC that you have to be offered the option to terminate your existing contract and get your money to that point. (Thus the motusbank "impacts on interest payable", perhaps refers to fact you'll get interest to the day they make the admin change to t&c that prompts you to cancel your GIC.)

That's my guess. I might be wrong as it seems like a windfall opportunity to get out of a low rate GIC part-way through if you can find a change to their t&c to trigger redemption, though it's also in the spirit of financial institution bashing that is always a sure-winner at street level so I might be right. But I'm pretty sure there's no change to the term's interest rate guarantee and security of principal that are the foundational basis and allure of GIC contracts, that strikes me as alarmist at this point. But as I said that's all just my personal guess at this point, by all means pursue whatever action you need for your own assurance, I'm sure you'll let us know.

Last week I was added to someone's joint account at Tangerine and the stuff they had to tell me on the phone about who this type of account is suitable for, who it isn't, etc, etc, etc went on forever. I got the impression the "consumer protection" disclosure requirements are way more than they used to be. I'm one that doesn't really enjoy society's constant assumption that I'm stupid (I like to think only people that know me have that right!) but maybe I'm in the minority these days.

March 19, 2023
6:47 pm
savemoresaveoften
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At worst, it may be a clause that allow CIBC to pay off a GIC early, but any owed interest over the entire term must be paid in full and maybe discounted.
0% chance the new agreement will allow CIBC to change a contracted GIC to a lower rate, etc.

I am with Bill that whatever change it is, it prob makes very little economic impact, if any,

March 19, 2023
7:32 pm
Norman1
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There can be multiple agreements for a GIC. The RBC Royal Bank Prime-Linked GIC has four agreements:

  1. Electronic Availability of the Terms and Conditions
  2. Client Agreement - Guaranteed Investment Certificate
  3. Special Conditions - Prime-Linked Cashable GIC
  4. Consent to Electronic Delivery of Statements and Notifications

The Client Agreement (agreement #2) is the one that the bank may make changes to anytime. That agreement doesn't have the interest rate.

The GIC interest rate is in the "Special Conditions" agreement, which does not allow the bank to make changes anytime.

March 20, 2023
1:47 pm
RetirEd
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Bill: Given the horror stories we see here and on news and finance media, I am happy to see extended disclosures and hope they will not be rattled off like rosaries with no understanding. The financial industry has a long history of requiring terms and conditions, among other details, to be provided and acknowledged. With all the new and/or scammy products being invented and marketed, and high-pressure tactics used at the Big Banks, there's no way most of us can keep up - let alone the average financial semi-literate.

The recent explosion over series A/series F trailer fees is an outstanding example of what few people understood when they faced a financial "adviser" (high-pressure salesthing) chanting "STAY THE COURSE!" endlessly.

There's no justification for our financial system being organized on a "harvesting of fools" basis.
RetirEd

RetirEd

March 20, 2023
4:59 pm
Bill
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RetirEd, I understand, guess we just disagree on this.

March 20, 2023
5:26 pm
savemoresaveoften
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RetirEd said
Bill: Given the horror stories we see here and on news and finance media, I am happy to see extended disclosures and hope they will not be rattled off like rosaries with no understanding. The financial industry has a long history of requiring terms and conditions, among other details, to be provided and acknowledged. With all the new and/or scammy products being invented and marketed, and high-pressure tactics used at the Big Banks, there's no way most of us can keep up - let alone the average financial semi-literate.

The recent explosion over series A/series F trailer fees is an outstanding example of what few people understood when they faced a financial "adviser" (high-pressure salesthing) chanting "STAY THE COURSE!" endlessly.

There's no justification for our financial system being organized on a "harvesting of fools" basis.
RetirEd  

the A vs F series is very straight forward and certainly not a ‘harvesting of fools’.
I am a believer of ‘fool me once, shame on you, fool me twice, shame on me’. That applies to the use of financial advisor as well. If one falls for ‘high pressure sales tactic’, one needs to grow up and learn to stand one’s ground.

March 20, 2023
5:53 pm
Loonie
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savemoresaveoften said

I am a believer of ‘fool me once, shame on you, fool me twice, shame on me’. That applies to the use of financial advisor as well. If one falls for ‘high pressure sales tactic’, one needs to grow up and learn to stand one’s ground.  

Have you tried that advice out on someone with dementia, imperfect vision or hearing, or just not as smart, educated and worldly-wise as you? There are lots of us out there.

March 21, 2023
8:29 am
bhuc
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I bought a 6 figure , 5 year GIC at 4.0 % in March of 2022 at CIBC.

Since CIBC has now given me the option of declining their changes to the terms and conditions of my personal non registered GIC , I will be able to redeem the full amount plus prorated interest as of April 16, 2023.

I intend to move the money to an FI that has given me a 45 day rate hold of 4.5% for a 5 year term.

If anyone wants out of their GIC with CIBC then this is their opportunity !
But one only has 30 days to exercise this offer because after 30 days you have consented to the changes and you are locked into the remaining rate and term !

Cheers !

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