DICO Coverage Increase | GIC discussions | Discussion forum

Perfect time to take advantage of the 2.25% Gic at Northern Credit Union. As we deal with DICO for our insurance on deposits.

gicjunkie said

The amendments include an increase in deposit insurance coverage up to $250,000 on eligible insured non-registered deposits. "

So, registered deposits (RRSP) is not included in DICO increase.

As a contrast, DGCM (Deposit Guarantee Corporation of Manitoba) provides an unlimited guarantee of all deposits including accrued interest - chequing, savings, GICs, and Registered Plans.

I am not surprised by this and wouldn't be surprised to see a CDIC deposit insurance change possibly to "harmonize" the coverage limit with Ontario's, as the provincial credit union deposit insurance supervisors' association to ensure it is not over-extended and a potential burden to taxpayers (hence all the "bail-in" provisions and capital adequacy rules).

Reportedly, according to Coast Capital Savings' employees, B.C.'s credit union deposit insurance regulator is looking at lowering its deposit insurance coverage limit, likely in the next year or two, I'd suspect.

I wouldn't be at all surprised to see unlimited deposit insurance coverage removed in each of Alberta, Saskatchewan and Manitoba as well.

I could see CDIC add foreign currency deposits to its list of "insured deposits" but I could also very likely see provincial deposit insurance corporations "harmonize" their limits at between $250,000 and $500,000 per insured depositor. 🙂

Some might 'mock' my theory but I'd caution against that - prepare yourselves for lower deposit insurance limits across the board (basically useless in the case of major banks which won't likely ever fail anyway) and then be pleasantly surprised if the reduced limit(s) are to the upside of my prediction. 😉

Cheers,
Doug

NorthernRaven said

If you are an employee of NCU, you should probably check with Peter (the owner of this board) about guidelines for corporate posts. There's some people here who get rather cranky about fluffy corporate PR.

The DICO changes don't take effect until 2018, so it has no beneficial effect for current GIC purchasers.  

NorthernRaven, I don't think these "guidelines" to which you refer were ever "carved in stone". Ideally, I'd like to see employees of financial institutions disclose their relationship but I'm strongly opposed to that being mandatory, especially if an employee is posting on their own personal (and unpaid) time. 😉

It's a message board, afterall, not a TV news channel. It's incumbent upon forum members and visitors to do their own "due diligence".

And, with the username "NCUInvestor," I'd actually say that likely qualifies as more than adequate disclosure.

I think this is also the second or third time you've tried to "pick this fight" and I don't understand why. I'd like to see you just drop this or I may have to address my displeasure with this with Peter at some point in the future. 😉

Thanks,
Doug

Doug said

I think this is also the second or third time you've tried to "pick this fight" and I don't understand why. I'd like to see you just drop this or I may have to address my displeasure with this with Peter at some point in the future. 😉

Thanks,
Doug  

I don't want to drag this out, but, for the record, I don't see that NorthernRaven was picking a fight with anybody, and their would be no reason to complain to Admin.

Thx guys. I didn't want to cross any lines.
Yah im a NCU employee.
I will make sure to make it public that I am an employee. Kinda why I made my username the way it is.

Overall with this change to DICO is a great thing for every credit union that you guys invest in. It will be very helpful to the investors to feel much safer with their investments.

NCUInvestor said
Thx guys. I didn't want to cross any lines.
Yah im a NCU employee.
I will make sure to make it public that I am an employee. Kinda why I made my username the way it is.

Overall with this change to DICO is a great thing for every credit union that you guys invest in. It will be very helpful to the investors to feel much safer with their investments.  

I agree. Your username was more than adequate disclosure. NorthernRaven is among the more "hawkish" forum members on here on this, for which not all of us agree. 😉

Cheers,
Doug

Loonie said
As regards the subject at hand, it was clear some time ago that DICO would be dropping the unlimited RSP coverage. That intention was expressed a year or two ago, so no surprise there. …

I don't think DICO is dropping the unlimited deposit coverage on RSP's.

Section 104 of regulations will read as follows:

104. For the purposes of paragraph 2 of subsection 270 (2) of the [Credit Unions and Caisses Populaires] Act and subsection 271 (3) of the Act, the Corporation shall,

(a) for an insurable deposit under paragraphs 1 to 6 of subsection 103 (2) of this Regulation, not insure the amount of the insurable deposit that exceeds $250,000;

(b) for an insurable deposit under paragraphs 7 to 16 of subsection 103 (2) of this Regulation, insure the full amount of the insurable deposit. O. Reg. 68/17, s. 31.

Paragraphs 1 to 16 of subsection 103 (2), enumerating the types of insured deposits, will be the following:

103. (2) For the purposes of the Act, each of the following is one insurable deposit:

1. A person’s deposit with the credit union that is not otherwise described in this section.

2. A joint deposit with the credit union of two or more persons, not in trust for a named beneficiary. Each unique combination of depositors gives rise to a separate insurable deposit.

3. A deposit with the credit union of a person, in trust for one named beneficiary.

4. A joint deposit with the credit union of two or more persons, in trust for one named beneficiary. Each unique combination of depositors gives rise to a separate insurable deposit.

5. The interest of each named beneficiary in a deposit with the credit union by a person, in trust for more than one named beneficiary.

6. The interest of each named beneficiary in a joint deposit with the credit union of two or more persons, in trust for more than one named beneficiary. Each unique combination of depositors gives rise to separate insurable deposits.

7. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered retirement savings plans within the meaning of the Income Tax Act (Canada).

8. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered retirement savings plans within the meaning of the Income Tax Act (Canada).

9. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered retirement income funds within the meaning of the Income Tax Act (Canada).

10. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered retirement income funds within the meaning of the Income Tax Act (Canada).

11. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s tax-free savings accounts within the meaning of section 146.2 of the Income Tax Act (Canada).

12. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s tax-free savings accounts within the meaning of section 146.2 of the Income Tax Act (Canada).

13. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered disability savings plans within the meaning of the Income Tax Act (Canada).

14. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered disability savings plans within the meaning of the Income Tax Act (Canada).

15. A deposit with the credit union, not in trust for a named beneficiary, to any of a person’s registered education savings plans within the meaning of the Income Tax Act (Canada).

16. A deposit with the credit union, in trust for a named beneficiary, to any of a person’s registered education savings plans within the meaning of the Income Tax Act (Canada). O. Reg. 68/17, s. 31.

No reduction in DICO coverage of registered accounts this time around. The Ontario government may consider it again next time.

CDIC may increase their coverage a bit to account for inflation since their last increase to $100,000 in 2005. But, I don't see the new credit-union-owned banks having much influence on CDIC's coverage level.

There's no shortage of banks in Canada. So, there won't be much pressure on the federal government should a few of the new credit-union-owned banks revert back to provincial credit unions if they find they need the higher provincial deposit insurance coverage to compete.

Also, in earlier post, I found that it is not considered good practice to have overly generous deposit insurance coverage. The approach is that depositors should take some responsibility for where they place their deposits after a certain point.

Bud said
Two CUs merge do existing GICs in each get separate deposit insurance to the max 250k till maturity?  

You will be covered up to original amounts, but any new deposits won't be covered if you were up to max before. ( Although for registered products there is unlimited coverage )

https://www.dico.com/design/1_0_Eng.html

Incidentally @Norman1 , I looked at your old thread and DICO didn't follow your recommendation to lower maximum coverage for registered funds 🙂 Interestingly enough, I think I read at GIC Wealth Management you can make a case for saying CDIC and DICO are two best FI guarantors in Canada since they are the only 2 guaranteed by a government. Not sure if that's an accurate statement or not, we've had many a discussion here about that.