CIPF Coverage Limit

Test yourself

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

1. 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. 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.

Related terms in Compliance

• Client Focused Reforms (CFR)

  The 2021 CSA reforms that rewrote suitability, KYC, and conflicts of interest.

• PCMLTFA

  Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

• FINTRAC

  Canada's federal anti-money-laundering and anti-terrorist-financing agency.

• OBSI (Ombudsman for Banking Services and Investments)

  Independent dispute-resolution body for client complaints escalated after the dealer's internal process.

• Large Cash Transaction Report (LCTR)

  Mandatory FINTRAC report for cash transactions of $10,000 CAD or more.

• Suspicious Transaction Report (STR)

  Mandatory FINTRAC report when reasonable grounds exist to suspect money laundering or terrorist financing.