Yes we do. Deposits held in Saskatchewan credit unions are fully guaranteed. There is no limit to the size of the deposit covered by the guarantee – whether $1 or $1,000,000 or more, all deposits are guaranteed.
Yes, accrued interest on deposits is included.
Yes, the guarantee covers all deposits in Saskatchewan credit unions regardless of membership, citizenship or residence of the depositor.
No you don’t. Credit unions provide services to the general public as well as their members. Deposit protection through Credit Union Deposit Guarantee Corporation is provided to all depositors of the credit union.
Mutual funds and securities are investments purchased by an agent who invests in other companies on your behalf. The investments are not deposits in the credit union so are not covered by the guarantee.
Shares and equity are not deposits. The guarantee does not cover any form of equity or capital.
The Corporation is not a government organization, but is accountable to the Government of Saskatchewan through the Registrar of Credit Unions. The Registrar has ultimate responsibility for the registration and regulation of credit unions.
While there is no explicit provincial government backstop on deposits held in Saskatchewan credit unions, the Corporation does have the ability to access financing from any government or regulatory body inside or outside of Canada. The Corporation and Saskatchewan credit unions have never had to rely on the government for financial assistance or bailouts.
The Corporation’s deposit protection model provides three levels of protection for deposits.
- sound credit union operations
- Standards of Sound Business Practice
- Regulatory policy and guidance
- Supervisory practices – monitoring and intervention
- Preventive programs
- capital reserves
- deposit guarantee fund
Prevention is Deposit Guarantee Corporation’s key deposit protection strategy. The preventive approach includes high standards of sound business practice, comprehensive monitoring practices, intervention if required, preventive programs and regulatory policy and guidance. This approach ensures sound credit union operations.
This preventive approach coupled with strong levels of capital and a strong guarantee fund ensures even the largest deposits are fully guaranteed.
In the history of the Corporation, no depositor has ever lost a dollar on deposit in a Saskatchewan credit union. Nor has the Corporation ever had to rely on the provincial or federal government for financial assistance.
As the primary regulator, Credit Union Deposit Guarantee Corporation monitors and examines credit unions. Credit union boards of directors are responsible for directing affairs to ensure credit unions are operated in a sound and prudent manner and in the best interest of depositors. Credit unions are required to have their operations audited annually by independent auditors. Credit unions report on their business, including disclosure of audited financial statements, at annual meetings.
Credit unions pay an annual assessment to the guarantee fund, which is managed by Credit Union Deposit Guarantee Corporation. The guarantee fund is a pool of money set aside to provide a guarantee of repayment of the full amount of funds on deposit in Saskatchewan credit unions.
The fund is maintained through the annual assessment paid by credit unions and interest earned on the fund. It is one of the strongest guarantee funds in North America.
The preventive initiatives of Credit Union Deposit Guarantee Corporation ensure that the fund is rarely drawn down.
Chartered banks and some trust companies are regulated by the federal government. Deposit insurance coverage for federally regulated financial institutions is determined and provided by Canada Deposit Insurance Corporation (CDIC).
Credit unions in Canada are regulated provincially, and each province has its own deposit protection program. The amount and type of deposit protection varies from province to province.
Credit unions are regulated under The Credit Union Act, 1998, The Credit Union Regulations, 1999 and The Credit Union Insurance Business Regulations. Credit unions must also comply with the Corporation's Standards of Sound Business Practice, and the bylaws and policies established by each credit union.
Q: How long have credit unions had the opportunity to continue as federal institutions?
A: In 2012, the federal government enacted a framework allowing provincial credit unions and caisses populaires to continue as federal credit unions.
Q: Have credit unions in other provincial jurisdictions transitioned to the federal regime?
A: In 2016, Caisse Populaire Acadienne (Uni Financial) in New Brunswick obtained the first federal credit union charter.
In 2016, members of Coast Capital Savings in British Columbia voted in favour of the institution seeking approval to continue as a federal credit union. Before transitioning to the federal regime, approval is required from the federal and provincial governments.
Q: What is the difference between provincial and federal regulation?
A: Under provincial regulation, a credit union is subject to provincial legislation and the Corporation’s regulatory oversight. Since 2012, credit unions have had the ability to apply to continue as federal credit unions under the federal Bank Act and the federal regulator, the Office of the Superintendent of Financial Institutions (OSFI). Once members approve the proposal and approval has been granted at both the provincial and federal levels, the former provincial credit union becomes a federal credit union. Federal credit unions are able to operate across Canada, much like Canadian banks.
When a Saskatchewan credit union transfers to the federal jurisdiction, it is no longer regulated provincially. A Saskatchewan credit union that continues federally will be incorporated under the Bank Act, and subject to all applicable federal laws.
Q: How does a Saskatchewan credit union apply to continue as a federal credit union?
A: Before a Saskatchewan credit union can transfer to the federal jurisdiction, it must first:
- obtain approval of its members through a formal vote;
- provide a completed application to the Corporation and the Registrar of Credit Unions (Registrar) for approval;
- receive approval from the Corporation and Registrar;
- provide a completed application to OSFI and the federal government for approval; and
- receive approval from OSFI and the federal government to continue in the federal jurisdiction.
Q: What are the Corporation’s primary considerations when reviewing an application for federal continuance?
A: The Corporation will ascertain whether members’ interests were considered and members were provided with fair, accurate, complete and timely information to make an informed decision.
As well, approval of an application for federal continuance requires determining whether a credit union’s move to the federal regime will negatively impact the Saskatchewan credit union system, its depositors, and the guarantee fund.
The Registrar is required by legislation to ensure he is satisfied that a credit union’s continuance in another jurisdiction will not adversely affect creditors, members or shareholders of the credit union.
Q: What is the Corporation’s opinion of provincial credit unions seeking federal continuance?
A: The Corporation respects a credit union’s right to self-determination and to pursue options available to it.
The Corporation, in conjunction with the Registrar, is obliged to consider approval criteria to be applied to credit unions seeking to transition to the federal jurisdiction. The Corporation is also obliged to consider the impact to the stability of the Saskatchewan credit union system.
Q: What are the Corporation’s expectations of credit unions seeking federal continuance with respect to member transparency?
A: The Corporation believes it is important that members and shareholders are adequately equipped to make informed decisions. Transparency, disclosure and active engagement of credit union members and stakeholders are of utmost importance.
It is imperative that information disclosed to members, upon which they make their decision, is fair, accurate, complete and timely.
Q: What criteria does a credit union need to satisfy for the federal government to approve an application for federal continuance?
A: The Corporation is unable to speak on behalf of OSFI or other federal government officials.
Q: How long does it take for the Corporation and Registrar to process an application for federal continuance and make a decision? What are OSFI’s timelines?
A: The Corporation anticipates that a review of an application could take three or more months once it has been received in satisfactory form. If a credit union’s membership votes in favor of federal continuance, the Corporation expects to receive a formal application shortly thereafter.
According to OSFI, approval can take 12-18 months once a complete application is received.
Q: How will deposit insurance coverage change for credit unions leaving the provincial system?
A: The Corporation is not associated with Canada Deposit Insurance Corporation (CDIC) and therefore, cannot speak specifically to the federal deposit insurance regime.
Information pertaining CDIC deposit insurance can be found at CDIC’s website: http://www.cdic.ca/en/about-di/Pages/default.aspx
Once a credit union continues federally, it becomes a member of CDIC. As such, eligible deposits placed with a federal credit union are subject to CDIC deposit protection.
To support a federal credit union during the change from provincial coverage to CDIC protection, transitional coverage applies.
Provincially insured deposits that existed prior to the change, and which are otherwise eligible for CDIC coverage, are considered "pre-existing deposits". During the transition period, these pre-existing deposits continue to be covered up to the amount that would have been insured under the provincial jurisdiction.
- For pre-existing demand deposits, such as chequing or savings accounts, the transitional coverage ends after 180 days, and CDIC coverage rules will then apply.
- For pre-existing term deposits, such as guaranteed investment certificates, transitional coverage will continue to apply until the deposits mature or are cashed out.
- Eligible deposits made after the federal credit union begins operating under the federal framework, including term deposits purchased after that date, will be subject to CDIC coverage rules.
A credit union that applies for federal continuance is required to inform members of any changes to their deposit insurance coverage prior to the change and throughout the transition period.
Q: If a credit union successfully transitions to the federal regime, what is the impact on the fund? What will happen to the credit union’s “share” of the guarantee fund?
A: Credit unions have been advised that the Corporation will be taking a recommendation to its board relating to credit unions transitioning to federal regime and the guarantee fund. The guarantee fund is collected specifically for the purposes of guaranteeing deposits and maintaining the stability of the Saskatchewan credit union system. Management is of the opinion that the fund is the property of the Corporation and will not be returned to credit unions transitioning to federal regime, so long as provincially regulated credit unions remain.
Q: Where can I find information pertaining to Innovation Credit Union’s plan to pursue federal continuance?
A: Innovation has a website dedicated to federal continuance. The website can be found at: https://www.voteyesinnovation2020.ca
Q: Does the Corporation expect other credit unions to seek federal continuance in the near future?
A: At this time, no other Saskatchewan credit unions have notified the Corporation of their intent to seek federal continuance.