Consistent with international and domestic best practices for deposit insurers, the DIRF is used to cover credit union members’ insurable deposits up to legislated maximum amounts in the rare event of a credit union failure. The fund is not made up of public money, but is funded through annual premium payments by credit unions and caisses populaires, and can only be used for specific reasons prescribed in legislation, including paying deposit insurance claims made by credit union members.
Credit unions and caisses populaires pay for deposit insurance coverage through premiums paid to FSRA. All insurable deposits held by depositors are automatically covered through the DIRF, administered by FSRA.
Payments for insurable deposits are made as soon as possible
The payment includes principal and interest up to $250,000 for insurable deposits held in non-registered accounts aggregated together and unlimited for insurable deposits held in registered accounts
Borrowers from an insolvent credit union or caisse populaire are responsible for repayment of outstanding debt until paid in full and will be notified by letter from FSRA with specifics, including any use of deposit insurance payments to assist in such repayment.
Ensure your credit union or caisse populaire always has your current and complete contact information and understand what’s covered and what’s not.
Insurable deposits held at Ontario credit unions and caisses populaires in Canadian currency are covered up to a maximum of $250,000. Insurable deposits include:
- Chequing and savings accounts
- Guaranteed Investment Certificates (GIC) and other term deposits (regardless of term of investment)
- Money orders
- Funds in transit
- Index-linked term deposits (principal portion only)
All insurable deposits in the following registered accounts have unlimited coverage:
- Locked-in retirement account (LIRA)
- Life income fund (LIF)
- Registered retirement savings plan (RRSP)
- Registered retirement income fund (RRIF)
- Registered disability savings plan (RDSP)
- Registered education savings plan (RESP)
- Tax-free savings account (TFSA)
The following are not covered under FSRA’s deposit insurance program:
- Mutual funds
- Membership shares
- Patronage, investment or preferred shares issued by a credit union
- Foreign currency deposits
- Contents of safety deposit boxes
- Securities held for safekeeping
The maximum basic coverage for insurable deposits held in non-registered accounts is $250,000 (principal and interest combined) per depositor in each Ontario credit union and caisse populaire and unlimited for insurable deposits held in registered accounts. Deposits held in different branches of the same credit union or caisse populaire are not separately insured.
FSRA’s deposit insurance program provides separate coverage for insurable deposits held in joint accounts, trust accounts, registered accounts, and eligible business accounts.
Updates to the DIRF advertising disclosures
FSRA has a statutory responsibility to protect the rights and interests of consumers and to promote public knowledge/education about the sector, this includes promoting a clear and accurate understanding of the deposit insurance framework and its limitations.
A recent review of deposit insurance advertising content concluded it was necessary to better clarify the limitations of FSRA’s liability for deposit insurance coverage.
No, FSRA’s previous advertising brochure and website accurately indicated that deposit insurance coverage is provided by the DIRF, administered by FSRA, and pre-funded by Ontario Credit Unions at no cost to depositors.
No, FSRA is not making any changes to the DIRF.
The updates made ensure that members continue to be adequately informed about their deposit insurance coverage. The changes do not affect how members’ insurable deposits are protected or what happens in the rare event of a credit union failure.
Deposit insurance premiums
A deposit insurance premium is a fee that a credit union pays annually to the Deposit Insurance Reserve Fund (“DIRF”). The DIRF is used for deposit insurance payouts in the event that a credit union does not have sufficient funds at the time of its failure.
A credit union’s annual premium is required under section 105 of Ontario Regulation 237/09 made under the Credit Unions and Caisses Populaires Act, 1994 (the Act) and the rules set out in the Differential Premium Score Determination published by the Authority in The Ontario Gazette.
The annual premium payable is calculated by using the Differential Premium Score (DPS) to determine a credit union’s annual premium rate and applying the rate to its insured deposits.
The differential premium score of a credit union is calculated with reference to:
- Capital: the level of regulatory capital of the credit union; and
- Corporate governance: the effectiveness of the corporate governance practices of the credit union as determined with reference to the Act and the Authority’s by-laws and rules.
The maximum DPS attainable is 100 points. Capital and corporate governance are assessed using information filed via the credit union’s Annual Information Return (AIR). When a credit union does not file its AIR, the credit union will be assigned a score of 0 points.
A credit union’s annual premium rate for a financial year that begins on or after January 1, 2020 is determined as follows:
- If the DPS of a credit union is 90 or over, annual premium rate = $0.75 per $1,000 of insured deposits.
- If the DPS of a credit union is 0, annual premium rate = $2.25 per $1,000 of insured deposits.
- If the DPS of a credit union is between 0 and 90, annual premium rate = 0.75 x ($1.75 - (DPS/90) x $0.75)) per $1,000 of insured deposits.
The AIR is expected to be filed by a credit union within 75 days after its fiscal year end.
A credit union’s deposit insurance premium invoice is issued within 90 days after the credit union’s fiscal year end. The invoice is payable within 30 days after the invoice date.
A cover letter, a DPS scorecard, the invoice, and a remittance copy of the invoice are included in the invoice package.
FSRA may charge interest at a rate equal to the rate prescribed under subsection 161 (1) of the Income Tax Act (Canada) plus 2 percent on the unpaid amount of the invoice.
You may contact your risk analyst at FSRA for invoice related questions, or your relationship manager if you require more information about deposit insurance premiums.