Canadian Investor Protection Fund
The Canadian Investor Protection Fund (CIPF) exists to ensure that, in the event of an investment dealer (e.g., broker) or mutual fund dealer insolvency, cash and securities are returned to the investor, within defined limits. CIFP is member funded, so there is no direct cost to the investor.
The CIPF was founded in 1969 and was originally named the National Contingency Fund.[1] Up to 2022 it covered only investment dealers, i.e. members of the Investment Industry Regulatory Organization of Canada (IIROC). But in January 2023, CIFP merged with the Mutual Fund Dealers Association of Canada (MFDA)'s Investor Protection Corporation.[2] This is related to the merger of IIROC and MFDA as the "New Self-Regulatory Organization of Canada". The consolidated CIFP will be independent from the New SRO.[2]
Coverage is automatic when you open an account with a member of the New SRO. Each member firm contributes to a substantial fund which CIPF maintains.[3]
Check the Member Directory on CIPF’s website to confirm that your discount broker, other investment dealer, or fund company is a member of CIPF. Note that mutual fund dealers registered in Quebec are not covered by CIPF, instead see the Fonds d’indemnisation des services financiers (Quebec financial services contingency fund).
What is covered and not covered
It is important to understand the nature of the CIPF coverage: it protects the investor exclusively against losing money due to an investment dealer (e.g., broker) or fund company insolvency. As of January 2023, accounts are protected for up to $1 million per account category:[4]
- cash accounts, margin accounts and Tax-Free Savings Accounts (TFSAs) combined;
- all registered retirement accounts combined, including Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs);
- all Registered Education Savings Plans (RESPs) combined.
CIPF offers no protection against:[4]
- a drop in the value of your investments for any reason
- investments that were not suitable for you
- fraudulent or other misrepresentations that were made to you
- misleading information that was given to you
- important information that was not disclosed to you
- poor investment advice
- the insolvency or default of the company or organization that issued your security
The CIPF coverage policy was last updated on January 1, 2023.
History of insolvencies
According to CIFP, since 1969, there have been 21 insolvencies and all eligible customer claims were reimbursed by CIPF. In total CIPF has paid claims of $47 million after recoveries.[5]
See also
References
- ^ CIPF, History of CIPF, viewed November 28, 2021.
- ^ a b Canadian Securities Administrators, CSA Staff Notice of Approval 25-308 Approval and Acceptance of Canadian Investor Protection Fund, November 24, 2022, viewed January 20, 2023.
- ^ Canadian Investor Protection Fund, Resources and Liquidity, viewed January 20, 2023.
- ^ a b CIPF, What Does CIPF Cover?, scroll down to "Coverage Limits for Individuals, Corporations and other Clients" viewed January 20, 2023.
- ^ Size of the CIPF Fund, viewed November 28, 2016.
Further reading
- Financial Wisdom Forum topic: "Brokerage insolvency protection: is it what you think it is?"