The is part of a series of blog posts reviewing some of the key differences between the statutory regimes governing Saskatchewan credit unions and federal credit unions. This post focuses on the differences in deposit insurance coverage between Saskatchewan and federal credit unions.
A key difference between Saskatchewan credit unions and federal credit unions is related to insurance for deposits held with such institutions, as discussed below.
Deposit Insurance for Saskatchewan Credit Unions
The Credit Union Deposit Guarantee Corporation (“CUDGC“) is the primary regulator for Saskatchewan credit unions and its mandate is outlined by The Credit Union Act, 1998 (Saskatchewan). Among other things, CUDGC is responsible for guaranteeing the repayment of deposits with credit unions. Subject to limited exceptions, deposits held in Saskatchewan credit unions are fully guaranteed by CUDGC – that is, there is no limit on the amount of deposits covered by the guarantee by CUDGC.
Deposit Insurance for Federal Credit Unions
The federal system of deposit insurance is operated by the Canada Deposit Insurance Corporation (“CDIC“) and its mandate is outlined by the Canada Deposit Insurance Corporation Act (Canada). Among other things, CDIC is responsible for providing insurance against the loss of part or all of deposits with federal financial institutions. Again subject to certain exceptions, deposits held in federal credit unions would be guaranteed by CDIC – but only up to $100,000 for any one deposit.
The extent of the deposit insurance available is a key difference between the provincial and federal regimes.
Notably, credit unions that are continued as federal credit unions have access to “transitional coverage” which extends the credit union’s existing deposit insurance for the applicable transition periods. For Saskatchewan credit unions continuing as federal credit unions, this transitional coverage means that the deposit insurance provided under Saskatchewan legislation is extended as follows:
- For pre-existing deposits (deposits made with a Saskatchewan credit union before its federal continuance), coverage will be extended as follows:
- For demand deposits (such as chequing or savings accounts), transitional coverage will be provided for 180 days following the day of continuance.
- For term deposits (such as GICs), transitional coverage will be provided until the deposit matures or is cashed out.
Following the applicable transition period, the general CDIC rules with respect to deposit insurance will apply.
- For deposits made after the day of continuance, the general CDIC rules with respect to deposit insurance will apply.
Saskatchewan credit unions continuing as federal credit unions are required to inform their members of the transitional coverage, including any changes to existing deposit insurance coverage. In addition to the above-noted changes in the amount of coverage, Saskatchewan credit unions will need to consider whether any deposits currently held by them will not be eligible for federal coverage. Some of the notable differences in coverage relate to foreign currency deposits (such as accounts in U.S. dollars) and term deposits with terms exceeding 5 years. In particular, neither of these deposits are eligible for federal coverage. You can read more about what is and what is not included in federal coverage for deposits here.
Certain other legislative measures recently introduced by the Federal Government are intended to assist provincial credit unions with this change in deposit insurance under the federal regime. These legislative measures will be discussed in more detail later in this series.
Next week’s blog post will focus on the differences in corporate powers between federal and Saskatchewan credit unions.