By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law (Signage and Display Requirements): SOR/2020-272
Canada Gazette, Part II, Volume 154, Number 26
Registration
SOR/2020-272 December 13, 2020
CANADA DEPOSIT INSURANCE CORPORATION ACT
The Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(f) footnote a of the Canada Deposit Insurance Corporation Act footnote b, makes the annexed By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law (Signage and Display Requirements).
Ottawa, December 9, 2020
By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Information By-law (Signage and Display Requirements)
Amendments
1 The definition place of business in section 1 of the Canada Deposit Insurance Corporation Deposit Insurance Information By-law footnote 1 is replaced by the following:
- place of business
- means a physical location in Canada where a member institution carries on business, where a person may make a deposit or commence a transaction to open a deposit account with the assistance of a representative of the member institution and where the majority of the deposit-taking activities relate to deposits eligible to be insured by the Corporation, but does not include an automated teller machine. (lieu d’affaires)
2 Subsection 3(2) of the By-law is replaced by the following:
(2) A member institution whose policy of deposit insurance is terminated or cancelled shall immediately remove from each of its places of business, each of its electronic business sites and each of its other websites and electronic sites all references to its status as a member institution and to the deposit insurance provided by the Corporation, including displays of the membership sign, brochure and badge.
3 The portion of subsection 4(2) of the By-law before paragraph (a) is replaced by the following:
(2) The representations may appear anywhere in the advertising of a member institution, if the location at which and the manner in which they are displayed do not give the impression that
4 (1) The portion of subsection 9(2) of the By-law before paragraph (a) is replaced by the following:
(2) If a member institution issues an instrument to a person evidencing that the member institution has received or is holding money that constitutes both a deposit that is eligible to be insured by the Corporation and a deposit that is not eligible to be insured by the Corporation, the member institution shall include on the face of the instrument, in the location specified, a warning statement in substantially the same words as one of the following statements:
(2) Subsection 9(3) of the By-law is replaced by the following:
(3) If a person communicates by telephone with a member institution to make a deposit or commence a transaction to open a deposit account referred to in subsection (1) or (2), the member institution shall
- (a) make an oral representation in substantially the same words as one of the statements set out in subsection (2); and
- (b) issue to the person in writing, in paper or electronic form, a notice that includes one of the statements set out in subsection (2).
5 Paragraphs 10(b) and (c) of the By-law are replaced by the following:
- (b) makes the list available on its website in a location that a depositor would be reasonably expected to look for information about the member institution’s trade names;
- (c) provides the Corporation with a copy of the list with its Return of Insured Deposits;
Coming into Force
6 This By-law comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the By-law.)
Background
The Canada Deposit Insurance Corporation Deposit Insurance Information By-law (the 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 CDIC. The Board of Directors of CDIC 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, September 27, 2017, and June 5, 2019.
Issues
Amendments to the Canada Deposit Insurance Corporation Deposit Insurance Information By-law are required to address potential depositor confusion resulting from the duplication of signage and brochure display requirements.
Currently, the By-law imposes signage and brochure display requirements to any physical location in Canada where a member institution carries on business and where a person may make a deposit or commence a transaction to open a deposit account with the assistance of a representative of the member institution.
Due to the application of similar signage requirements imposed by provincial authorities, certain locations are subjected to multiple signage requirements leading to potential depositor confusion. Amending the definition of “place of business” will establish when CDIC signage is required and when it is not, by clarifying that CDIC signage and brochure display are only required for those locations where the majority of the deposit-taking activities relate to deposits eligible to be insured by the Corporation. This amendment mitigates the risk of depositor confusion caused by multiple signage requirements. The requirement that a member institution provide depositors with an abbreviated brochure, as part of the account opening process for a deposit that is eligible to be insured by the Corporation, remains in place. This provides the necessary assurance that depositors are appropriately informed as to the applicability of CDIC deposit protection.
Other amendments improve clarity and remove redundancies.
Objective
The main objective of the Amending By-law is to address the issues mentioned above.
Description
The table below provides a description of the changes.
| Amending By-law Section |
By-law Section |
Rationale |
|---|---|---|
1 |
1 |
Amendment excludes locations from CDIC’s signage requirements where a CDIC member institution conducts business but where the majority of the deposit-taking business does not relate to deposits that are eligible to be insured by CDIC. The amendment ensures that signage and display requirements are not duplicative with current requirements of provincial authorities. |
2 |
3(2) |
Amendment expands the scope of application of the requirement to remove CDIC references upon termination of the policy of deposit insurance to those websites and electronic sites that may not be captured by the definition of "electronic business site." |
3 |
4(2) |
Amendment aligns this provision with the prior repeal of subsection 4(3). |
4(1) |
9(2) |
Amendment required to align with prior repeal of paragraph 9(2)(a), which resulted in all the statements having a specified placement location. |
4(2) |
9(3) |
Amendment clarifies that subsection 9(3) applies to transactions that are made by telephone. |
5 |
10(b) |
Amendment clarifies where the list of member institution trade names is to be displayed on member websites. |
5 |
10(c) |
Amendment removes a date that is no longer applicable to clarify that member institutions must provide their list of trade names annually, together with their Return of Insured 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 amendments were prepublished in the Canada Gazette, Part I, for a 30-day comment period. No comments were received.
Rationale
The Amending By-law ensures the By-law remains clear and up to date, and that CDIC signage requirements only apply to locations where the majority of the deposit-taking activities relate to deposits eligible to be insured by the Corporation. The Amending By-law achieves the stated objective and addresses the identified issues. The Amending By-law does not impose any additional regulatory costs or administrative burden on industry.
Implementation, compliance and enforcement, and service standards
The amendments come into force on the date of registration of the Amending By-law. There are no compliance or enforcement issues.
Contact
Mueed Peerbhoy
Senior Legal Counsel
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
Ottawa, Ontario
K1P 6L2
Telephone: 343‑572‑9516
Email: mpeerbhoy@cdic.ca