CIPF Coverage Limit: Definition + Case Study

CIPF Coverage Limit

Protection of up to $1 million per separate account category in the event of a CIRO investment dealer insolvency.

Definition

The Canadian Investor Protection Fund (CIPF) covers client property held at an insolvent CIPF member firm (a CIRO investment dealer or mutual fund dealer) up to $1 million per account category. The categories are: (1) all general accounts combined, such as cash, margin, TFSA and FHSA accounts, (2) all registered retirement accounts combined, such as RRSPs, RRIFs and LIFs, and (3) RESPs where the client is the subscriber. A client with property in all three categories at the same firm could receive combined CIPF protection of up to $3 million. Coverage applies to cash, securities, and certain commodity contracts held in client accounts; it does not cover losses from unsuitable recommendations, fraud by third parties, or market-price declines. CIPF coverage is automatic for eligible clients of member firms - there is no registration required. Mutual fund dealer accounts located in Quebec are not covered unless the firm is also an investment dealer. Verify current coverage limits at cipf.ca.

Source

CIPF Coverage Policy; CIRO IDPC Rules; cipf.ca

Where this shows up on the CIRE

Outcome 1.6

Test yourself

Two real CIRE-bank questions on this exact outcome. Click to reveal the answer and the rule citation.

1
A CIRO dealer member becomes insolvent and is unable to return client securities and cash. Which statement accurately describes the Canadian Investor Protection Fund (CIPF) coverage in this scenario?
Outcome 1.6 · click for answer
A.CIPF only reimburses cash shortfalls at insolvent dealer members, not missing securities positions.
B.CIPF reimburses any investment loss, including market declines, dollar-for-dollar up to $1 million per account.
C.CIPF covers securities and cash missing due to the dealer member's insolvency, up to prescribed limits, not market or advice losses.Correct
D.CIPF coverage is unlimited for all registered accounts, such as RRSPs and TFSAs, regardless of account category limits.
CIPF protects clients against the loss of property held at a CIRO dealer member that results from the firm's insolvency; it does not insure against investment losses from market movements or poor advice. Coverage is subject to prescribed limits (generally $1 million per account category combination). Securities and cash are both covered. CIPF coverage is not unlimited even for registered accounts; the limits apply across account categories, and registered accounts fall within defined limits rather than receiving unlimited coverage.
2
A retail client holds $320,000 in securities in a general account and $180,000 in securities in a separate RRSP account at the same CIRO dealer member. The dealer member becomes insolvent. How does CIPF coverage apply?
Outcome 1.6 · click for answer
A.CIPF combines both accounts into one pool at the firm, capping total coverage at $1,000,000
B.CIPF caps protection at $100,000 per account regardless of the type of account held
C.CIPF protects the registered plan assets, leaving the general account securities uninsured
D.CIPF treats the general account and the RRSP as separate pools, each covered up to $1,000,000Correct
CIPF provides coverage per account category, not per client in aggregate. A client's general accounts form one pool eligible for up to $1,000,000, and registered accounts (such as RRSPs) form a separate pool also eligible for up to $1,000,000 in coverage. The client with $320,000 in a general account and $180,000 in an RRSP is fully covered under both pools. CIPF does not restrict coverage to registered accounts only, and the $100,000 figure is not the applicable CIPF limit.

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