Order Fixing April 30, 2021 and April 30, 2020 as the Days on which Certain Provisions of that Act Come into Force: SI/2019-17
Canada Gazette, Part II, Volume 153, Number 7
SI/2019-17 April 3, 2019
BUDGET IMPLEMENTATION ACT, 2018, NO. 1
Order Fixing April 30, 2021 and April 30, 2020 as the Days on which Certain Provisions of that Act Come into Force
P.C. 2019-222 March 25, 2019
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance,
- (a) pursuant to subsection 213(1) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, fixes April 30, 2021 as the day on which Division 2 of Part 6 of that Act comes into force, other than section 203, subsection 204(2), section 206 and subsections 211(1) and (3) to (5); and
- (b) pursuant to subsection 213(2) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, fixes April 30, 2020 as the day on which section 203, subsection 204(2), section 206 and subsections 211(1) and (3) to (5) of that Act come into force.
(This note is not part of the Order.)
This Order in Council, pursuant to subsection 213(1) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018 (BIA1 2018), fixes April 30, 2021, as the day on which Division 2 of Part 6 of that Act comes into force, other than section 203, subsection 204(2), section 206 and subsections 211(1) and (3) to (5).
In addition, this Order in Council, pursuant to subsection 213(2) of BIA1 2018, fixes April 30, 2020, as the day on which section 203, subsection 204(2), section 206 and subsections 211(1) and (3) to (5) of that Act come into force.
The purpose of this Order is to establish coming-into-force dates for amendments to the Canada Deposit Insurance Corporation Act (CDIC Act) that will modernize and enhance the Canadian deposit insurance framework to better protect depositors and support the ongoing stability of the financial system in Canada.
Deposit insurance is an important element of the financial safety net. It contributes to maintaining public confidence in the financial system by protecting depositors’ savings in the unlikely event that a deposit-taking institution fails.
Canada’s deposit insurance framework is established under the CDIC Act and administered by the Canada Deposit Insurance Corporation (CDIC), a federal crown corporation under the purview of the Minister of Finance. The CDIC provides deposit insurance to depositors in Canadian banks, federally incorporated trust and loan companies, federal credit unions, provincially incorporated trust and loan companies, and cooperative retail associations. The CDIC insures eligible deposits at each of their member institutions up to Can$100,000 per separately insured category in the event of a failure. Coverage is free and automatic. Depositors in Canada do not have to apply for coverage, or make a claim in the event of a failure. The CDIC is funded by premiums paid by member institutions and does not receive public funds to operate. The CDIC currently has 85 members.
Deposit Insurance Review
Canada’s financial system proved to be resilient during the 2008 financial crisis. At that time, modifications to Canada’s deposit insurance framework were not needed to maintain confidence in the financial sector. Since the 2008 crisis, the global banking landscape has changed significantly, including the introduction of financial regulatory reforms aimed at reducing the probability of a future financial crisis. In light of such changes, the Government of Canada announced, in the 2014 Budget, the launch of a comprehensive review of Canada’s deposit insurance framework to ensure that it would continue to provide adequate protection for the savings of Canadians.
Based on the review, which included public consultations held in 2016, several proposed amendments to the CDIC Act were introduced in Division 2 of Part 6 of BIA1 2018. These changes, referred to as the Deposit Insurance Review (DIR) provisions, received royal assent on June 21, 2018, but must be brought into force by order in council.
Specifically, the DIR provisions modernize the scope of deposit insurance coverage, simplify and streamline requirements, and better reflect products currently offered in the market by
- removing travellers’ cheques, which are no longer issued by member institutions, as an eligible deposit;
- eliminating the five-year term limit on guaranteed investment certificates (GICs), as longer-term products are now available;
- extending coverage to foreign currency deposits, which are widely used by Canadians;
- treating all registered products in the same manner by adding new deposit categories for registered education savings plans (RESPs) and registered disability savings plans (RDSPs), so that every registered product is covered up to the same $100,000 limit;
- removing separate coverage for mortgage tax accounts (funds held in mortgage tax accounts will still receive coverage under other coverage categories as long as the funds are held as an eligible deposit, e.g. as an individual or joint deposit); and
- improving the rules for trust deposit accounts, by clarifying record-keeping requirements and facilitating more timely payouts in the event that a bank fails.
This Order establishes the coming-into-force dates of the DIR provisions. The Order fixes April 30, 2020, as the coming-into-force date for the DIR provisions pertaining to travellers’ cheques, removing term limits on GICs, and extending coverage to foreign currency deposits. The Order also fixes April 30, 2021, as the coming-into-force date for the DIR provisions pertaining to registered deposits, mortgage tax accounts, and trust deposits.
The DIR provisions will come into force on different dates to take into account views of the major interest groups, including consumer groups, financial institutions, and financial sector and legal industry associations. These stakeholders are generally supportive of the DIR provisions, and they support the goals of depositor protection and financial stability. However, some concerns were raised about having an appropriate amount of time to update internal information systems in order to implement the DIR provisions. On balance, stakeholders agreed that, as long as sufficient time is provided to update systems based on the complexity of the different changes, the DIR provisions would be workable.
The coming into force of the DIR provisions is not expected to have differential impacts on the basis of sex, gender, age, race, ethnicity, sexuality, religion, and/or mental or physical disability. All depositors in Canada are expected to benefit from the proposed measures, which support greater financial stability.
There are no financial implications for the Government of Canada with this Order in Council.
Overall, these amendments will help protect depositors; improve understanding of insurance coverage; and ultimately, better support Canada’s ongoing financial stability. The DIR provisions will modernize the scope of deposit insurance coverage to better protect depositors (e.g. foreign currency and extended term limits on GICs) while clarifying and simplifying the deposit insurance framework for depositors, making it easier to understand (e.g. registered deposits and mortgage tax accounts).
The Department of Finance Canada held public consultations on changes considered to the deposit insurance framework in the fall of 2016. Approximately 15 submissions were received from a range of stakeholders. In addition, the CDIC held public consultations on proposed changes to the Canada Deposit Insurance Corporation Joint and Trust Account Disclosure By-law needed to implement the DIR provisions.
The decision to sequence the coming-into-force dates of the different DIR provisions reflects the input provided by stakeholders and interested parties.
Capital Markets Division
Financial Sector Policy Branch
Department of Finance Canada
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