Deposit Guarantee Q & As
What is Credit Union Deposit Guarantee Corporation?
Credit Union Deposit Guarantee Corporation is the primary regulator for Saskatchewan credit unions. The Corporation is established through provincial legislation for the main purpose of guaranteeing the repayment of deposits held in Saskatchewan credit unions. The Corporation has successfully fulfilled its obligation for over 55 years.
When was the Corporation started?
Credit Union Deposit Guarantee Corporation was established in 1953. It was initially called the Mutual Aid Board. The name was changed in 1983 to better represent our purpose.
How is the Corporation organized?
A board of directors governs the business affairs of Credit Union Deposit Guarantee Corporation. The Corporation’s board consists of three representatives from the Saskatchewan credit union system and two representatives from the provincial government.
As directors, these representatives work together to ensure that deposits held in credit unions are safe and secure and to support a strong and viable provincial credit union system.
Who is the Corporation accountable to?
The Corporation is accountable to the Government of Saskatchewan’s Registrar of Credit Unions.
What are the Corporation’s primary responsibilities?
Our primary responsibilities are:
• guarantee the repayment of deposits in Saskatchewan credit unions
• maintain, administer and manage a guarantee fund in a manner consistent with industry standards
• establish prudential Standards of Sound Business Practice and monitor credit union performance according to those Standards
• direct credit unions to take immediate action on any issue that has the potential to place depositor funds at risk
How are deposits protected?
There are three levels of deposit protection:
• Credit unions are required to hold retained earnings to support operations, including business risks.
• Credit unions contribute annually to a guarantee fund managed by Credit Union Deposit Guarantee Corporation.
• Credit unions are required to operate in a prudent manner by complying with provincial legislation and standards of sound business practice. As a result, potential for loss is minimal.
How will I know if my deposits at the credit union are guaranteed?
All deposits held in Saskatchewan credit unions are guaranteed.
Do I have to be a member of the credit union to qualify for the guarantee?
No. The Credit Union Act, 1998 permits credit unions to provide services to the general public. Deposit protection through Credit Union Deposit Guarantee Corporation is provided to all depositors of the credit union.
Who pays the cost of deposit insurance?
Guarantee assessments are charged to credit unions annually by Deposit Guarantee Corporation.
When you say “All deposits are fully guaranteed” do you mean “All”?
Yes we do. There is no limit to a depositor’s valid claim regardless of the amount on deposit – whether $100 or $1,000,000 or more, all deposits are guaranteed.
What exactly is covered by the guarantee?
The guarantee applies to all forms of personal, business and trust deposits including, but not limited to chequing, savings, term deposits (GICs) and registered plans, including accrued interest and the Canadian dollar equivalent of funds deposited in another currency.
Index-linked term deposits are a special case. Your initial deposit, or principal, in an index-linked term deposit is fully guaranteed. The return these deposits realize is linked to the performance of the stock exchange. Therefore, the rate of return cannot be guaranteed. However, repayment of the principal is fully guaranteed. Return is only fully guaranteed once the credit union is holding it.
Are my deposits in a Saskatchewan credit union fully guaranteed even if I live outside the province or in another country?
Yes, the guarantee covers all deposits in Saskatchewan credit unions regardless of membership, citizenship or residence of the depositor.
What is not covered by the guarantee?
Contents of safety deposit boxes or securities held for safekeeping. The guarantee does not cover any form of equity or capital such as membership or investment shares. The guarantee does not apply to mutual funds or other investment programs that are not credit union deposits.
Why are safety deposit box contents not covered?
The safety deposit box is rented from a credit union to house one’s personal belongings. The contents of the box are not considered deposits made to the credit union and therefore no deposit protection exists through the credit union and Deposit Guarantee Corporation.
Why are mutual funds and securities not covered by the guarantee?
Mutual funds and securities are investments purchased by an agent who invests in other companies on your behalf. The investments are not deposits held in a credit union; therefore they are not covered by the guarantee.
Why aren’t shares and equity included in the guarantee?
Shares and equity are not deposits. The guarantee does not cover any form of equity or capital.
Is interest on deposits included as part of the guarantee?
Yes, accrued interest on deposits is included.
How does the credit union guarantee compare to deposit insurance at banks and trust companies?
Credit unions are provincially regulated and have provincial deposit protection programs in place. In Saskatchewan, the Deposit Guarantee Corporation fully guarantees all deposits held in Saskatchewan credit unions. Banks are federally regulated and provide deposit insurance limits through Canada Deposit Insurance Corporation.
Is the same level of deposit protection provided in other provinces?
No. Because credit unions are provincially regulated, the extent of deposit protection provided varies from province to province.
Does the Government of Saskatchewan provide backup financing to support Deposit Guarantee Corporation’s guarantee of deposits?
No, there is no agreement from the provincial or federal government to provide back-up financing.
Without a government backstop, how does Deposit Guarantee Corporation guarantee the repayment of deposits?
Credit unions are required to operate in a sound and prudent manner, and hold retained earnings to support operations and business risks.
Through annual credit union assessments, Deposit Guarantee Corporation manages the deposit guarantee fund.
The Corporation monitors and examines Saskatchewan credit unions to confirm financial strength and the safety of depositors’ funds.
The government is regularly updated on the performance of the Saskatchewan credit union system through its representation on the Corporation’s board of directors.
What laws or standards are credit unions in this province regulated under?
Credit unions are regulated under The Credit Union Act, 1998,
The Credit Union Regulations, 1999, The Credit Union Insurance Business Regulations, the Corporation’s Standards of Sound Business Practice, and bylaws and policies established by each credit union.
Who is responsible for monitoring the performance of Saskatchewan credit unions?
As the primary regulator, Credit Union Deposit Guarantee Corporation monitors and examines credit unions. Annually, credit unions are required to have their operations audited by independent auditors. 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 interests of depositors. Credit unions report on their business, including disclosure of audited financial statements, at annual meetings.
If your questions have not been addressed please contact the Corporation:
Email: cudgcweb@cudgc.sk.ca
Phone: (306) 566-1286
Fax: (306) 566-1770
Address
P.O. Box 3030
2055 Albert Street
Regina Saskatchewan
S4P 3G8