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Canadian Investor Protection Fund (CIPF): how it protects your investments

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You might already know that any deposits you have in a Canadian bank account are insured by the Canada Deposit Insurance Corporation in the event the bank runs into financial troubles, but did you know there’s also a similar program for your investments?

The Canadian Investor Protection Fund (CIPF) is designed to protect Canadian investors in certain situations. But what is the CIPF, exactly, and what are its limitations? Let’s take a look.

What is the CIPF?

CIPF stands for Canadian Investor Protection Fund. It’s a not-for-profit organization that helps protect the money in Canadians’ investment accounts. CIPF’s mandate was established by Canada’s provincial and territorial securities regulators, and offers protection to customers who may suffer financial losses if a member firm becomes insolvent.

In simple terms, this means that if the firm or institution holding your investments runs into financial trouble and has to file for bankruptcy, your investments are insured/secure if they are a member of the CIPF.

The CIPF itself is funded by the members of its organization.

What the CIPF covers (and what it doesn’t)

CIPF coverage extends primarily to what’s known as missing property. This may include:

  • Cash balances
  • Securities (including stocks, bonds, and GICs) held by a member firm
  • Futures contracts
  • Segregated insurance funds

Coverage is only provided to eligible clients whose funds are not returned to them following the investment firm’s insolvency – hence the term “missing.”

While the CIPF offers coverage for losses in cases of an investment firm’s insolvency, it’s also important to understand what type of coverage is not included in the CIPF’s mandate. CIPF coverage does not include the following:

  • Securities you hold directly (they must be held by an investment firm to be eligible for coverage)
  • Mutual funds held directly at a mutual fund company and registered in your name
  • Crypto assets of any kind
  • Losses resulting from: fraud; bad investment advice; undisclosed information; any drop in the value of your investments; unsuitable investments; misrepresentation or misleading information given to you
  • Any loss from the insolvency or default of the company or organization that issued a security
  • Securities held by a non-member firm
  • Some other exclusions

CIPF member firms

When purchasing investments, you want to ensure your money is protected. You can do so by checking if the company is a member of the Canadian Investor Protection Fund.

To become a member firm, the company must be part of the New Self-Regulatory Organization of Canada (New SRO). The New SRO is responsible for overseeing all investment dealers, mutual fund dealers, and trading activity on Canada’s debt and equity marketplaces.

Some types of CIPF-insured firms include:

  • Investment dealers (not based in Quebec)
  • Mutual funds dealers (not based in Quebec)
  • Wealth management firms
  • Securities firms
  • Any of the big bank investment services or divisions

How much of my investments does the CIPF cover?

CIPF coverage limits are different depending on whether you’re investing as an individual, a corporation, partnership, trust, or unincorporated organization. Coverage is per person per investment dealer.

For individuals, the CIPF offers these general protection limits:

  • $1 million for all general accounts combined (such as cash accounts, margin accounts, and TFSAs)
  • $1 million for all registered retirement accounts combined (such as RRSPs, RRIFs, and LIFs)
  • $1 million for all registered education savings plans (RESPs) combined, where the client is the subscriber of the plan

For corporations, partnerships, and unincorporated organizations, the rules are a bit different.

According to the Canadian Investor Protection Fund’s website, “A corporation, partnership or unincorporated organization holding an account with a member firm is generally considered to be separate from its owners or partners for purposes of determining the limit on CIPF protection. The limit on CIPF protection for these types of clients is generally $1 million for all accounts combined. Some exceptions apply.”

If you have a joint account (such as with a spouse) the CIPF assumes both parties’ interest in the account is equal, and offers protection for each person’s interests. Keep in mind that the CIPF will only provide compensation for the market value of the missing investments as determined at the date of the firm’s insolvency.

CIPF coverage examples

Let’s say you worked with a financial adviser to set up a portfolio of investments. You purchase 100 shares of stock for $200. A year later, the company your adviser worked for goes out of business and your shares are worth only $150 on the day the company became insolvent. The CIPF would help make sure the value of your investments on the day the firm became insolvent — in this case, $15,000 (100 shares @ $150/each) — is returned to you. In other words, the CIPF doesn’t guarantee the original value of your investment.

To make a claim with the Canadian Investor Protection Fund, a set of procedures must be followed. If the CIPF denies your claim, you can file an appeal within 60 days.

Frequently asked questions

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