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Lighthouse Credit Union
January 19, 2023
1:43 pm
Briguy
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butterflycharm said

I made a phone appointment and the rep said 1% is not for GICs and only for their Wealth Management which is mutual funds and etfs.  

Thanks for doing that ! I called them today and gave up after being on hold for 10 minutes.

January 19, 2023
2:30 pm
butterflycharm
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Briguy said

Thanks for doing that ! I called them today and gave up after being on hold for 10 minutes.  

I made the appointment online and person that called was on time and answered all my questions. It is hard to know if a rep really knows whatthey or they just brush it off. But from what he said GICs do not get the 1%.

I see that 2021 Meridian had a 1% offer for transferring TFSA. I would like something like that from them if they bring it back or any other FI and must have high rates for GICs too 🙂

January 19, 2023
2:34 pm
butterflycharm
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savemoresaveoften said

That FI advisor is full of ….  

FI advisors exist probably because people still believe in brick and mortar. Why take a loss from someone else's decision? one can generate their own losses.

January 22, 2023
10:32 am
Doug
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Loonie said
The risk is that your GIC would be cut short if the CU fails, and you don't know how long you'd have to wait for reimbursement.

I'm not comfortable with their business model, to the extent it has been described. To me, it doesn't make sense. You have to evaluate this for yourself.
I'd like to see them have a track record first.  

Possibly. In most situations, though, the GIC continues to term by the acquiring FI and FSRA's deposit insurance fund is not touched. For example, with the recent failure of PACE Savings and Credit Union, Alterna Savings opportunistically acquired all deposits (and I believe all mortgages), with any premium paid into a trust fund together with any funds FSRA paid in to help cover bad loans. That's how most financial institution resolutions happen. This is way FSRA deposit insurance limits don't really matter that much.

It would be exceedingly rare that the failed institution did not have the cash on its book to cover its deposits, as that would've/should've been found by regulators before it got to that situation.

That being said, while it's nice to see a new credit union incorporated organically in an increasingly difficult regulatory framework and environment, I personally wouldn't become a member for reasons similar to Loonie.

Cheers,
Doug

January 22, 2023
11:06 am
butterflycharm
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Doug said

Possibly. In most situations, though, the GIC continues to term by the acquiring FI and FSRA's deposit insurance fund is not touched. For example, with the recent failure of PACE Savings and Credit Union, Alterna Savings opportunistically acquired all deposits (and I believe all mortgages), with any premium paid into a trust fund together with any funds FSRA paid in to help cover bad loans. That's how most financial institution resolutions happen. This is way FSRA deposit insurance limits don't really matter that much.

It would be exceedingly rare that the failed institution did not have the cash on its book to cover its deposits, as that would've/should've been found by regulators before it got to that situation.

That being said, while it's nice to see a new credit union incorporated organically in an increasingly difficult regulatory framework and environment, I personally wouldn't become a member for reasons similar to Loonie.

Cheers,
Doug  

1- Are GIC types registered with gov or FSRA or any other organizations showing FI name, Term of GIC, and rate?

2- Are all purchased GICs registered with gov or FSRA showing FI name, term of GIC, and rate?

3- Is any of the above public info?

If such lists don't exist, how would the regulator know when a small credit union cashes the deposits and tries to pull a disappearing act?

January 22, 2023
2:06 pm
Wayno
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NO is the answer to all three questions.
http://www.fdrao.ca will explain how Ontario credit unions are regulated ! sf-cool

January 22, 2023
7:23 pm
Doug
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butterflycharm said

1- Are GIC types registered with gov or FSRA or any other organizations showing FI name, Term of GIC, and rate?

2- Are all purchased GICs registered with gov or FSRA showing FI name, term of GIC, and rate?

3- Is any of the above public info?

If such lists don't exist, how would the regulator know when a small credit union cashes the deposits and tries to pull a disappearing act?  

No, deposits aren't reported in that granularity. Financial institutions have to file capital adequacy financial returns disclosing the dollar value of certain asset and liability types on their balance sheet, as well as the net change for each from the previous month/quarter. They may also have to periodically report, usually annually, the names of each different beneficial owner of deposits and may also have to attach the dollar value of their deposits. Returns are reviewed, and, presumably, the regulator (FSRA) conducts random on-premises audits of a specified number of FIs each year.

They do have to post their financial statements to members regularly (usually annually), which generally means on their websites. An public accounting firm has to audit those financial statements, which includes looking at the actual balances on a given reference date to confirm that has been reported is accurate. It would be a serious offense for an accounting firm to sign off on known inaccurate data. So, I guess that would be your best sense of confort—the auditor's report that accompanies the audited financial statements.

Board members also have a fiduciary duty to review the details of the financial statements and could be personally sued in certain circumstances, though credit unions typically maintain director liability insurance that would cover cases of malfeasance or negligence by board directors.

Usually there are warning signs or red flags, and at that point, the regulator (FSRA) would typically take steps to fire the board and/or its executive team, suspend members' voting privileges, and place the credit union under the administration of the FSRA.

Cheers,
Doug

January 22, 2023
7:39 pm
Norman1
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There's not much deposit money to take off with. Most of the deposit money is long gone because it is loaned out.

If one places funds in a three year GIC, the credit union or bank will lend those funds out as soon as possible through matching three-year loans.

Credit unions and banks don't raise all the deposit money and park the money in a bank vault.

January 22, 2023
10:50 pm
butterflycharm
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Norman1 said
There's not much deposit money to take off with. Most of the deposit money is long gone because it is loaned out.

If one places funds in a three year GIC, the credit union or bank will lend those funds out as soon as possible through matching three-year loans.

Credit unions and banks don't raise all the deposit money and park the money in a bank vault.  

Unless when times are different for them and that is exactly when certain loans that came back go missing...

Yeah, I understand they loan out the same GIC funds that they sold at lower interest rate and then loaning out to higher private mortgages etc (1st, 2nd or even 3rd place maybe)

They still probably have to keep some liquidity (liquidity adequacy) and can not invest in all sorts of investments. At least banks are under such rules and have to keep some with BoC I think...

With CUs of less than 500 million seems the rules are more relaxed. And no matter how tight the rules are there will be gaps in times of reporting / analyzing and that is when things can go different way.

I think this very much depends on the premium amount that has to be paid to FSRA. Why is that not to be disclosed anyway? and yes on the executives if there are criminal provisions in the act.

January 22, 2023
10:51 pm
butterflycharm
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Doug said

No, deposits aren't reported in that granularity. Financial institutions have to file capital adequacy financial returns disclosing the dollar value of certain asset and liability types on their balance sheet, as well as the net change for each from the previous month/quarter. They may also have to periodically report, usually annually, the names of each different beneficial owner of deposits and may also have to attach the dollar value of their deposits. Returns are reviewed, and, presumably, the regulator (FSRA) conducts random on-premises audits of a specified number of FIs each year.

They do have to post their financial statements to members regularly (usually annually), which generally means on their websites. An public accounting firm has to audit those financial statements, which includes looking at the actual balances on a given reference date to confirm that has been reported is accurate. It would be a serious offense for an accounting firm to sign off on known inaccurate data. So, I guess that would be your best sense of confort—the auditor's report that accompanies the audited financial statements.

Board members also have a fiduciary duty to review the details of the financial statements and could be personally sued in certain circumstances, though credit unions typically maintain director liability insurance that would cover cases of malfeasance or negligence by board directors.

Usually there are warning signs or red flags, and at that point, the regulator (FSRA) would typically take steps to fire the board and/or its executive team, suspend members' voting privileges, and place the credit union under the administration of the FSRA.

Cheers,
Doug  

Yeah, valid points.

What is lighthouse business model? Does anyone know? It is not on their website and no reports of business activities is posted or revenues.

January 23, 2023
11:46 am
Wayno
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They were approved in March and just opened for business in June 2023 ( only 6 months). Therefore no year end statements yet !

So ... Why not call them and ask your questions !
(416) 477-LCUL (5285)

We all have to do our own research and make our own decisions on how best to invest our money.

Wishing you the best !

January 23, 2023
1:58 pm
JenE
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My confidence in Lighthouse Credit Union has gone, as I’ve waited unsuccessfully for 5 business days for my cheque to be deposited. I stopped payment on it today.

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