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 covers only cash deposits, not securities.

   B.CIPF covers missing client property; securities and cash held at the dealer member; arising from the dealer member's insolvency, up to prescribed limits, but does not cover losses arising from market risk or unsuitable recommendations.Correct

   C.CIPF covers any investment losses, including losses from market declines, up to $1 million per account.

   D.CIPF coverage is unlimited for registered accounts such as RRSPs and TFSAs.

   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 covers a combined maximum of $1,000,000 across both accounts because they are held at the same firm.

   B.CIPF coverage applies separately to each account category: the general account and the registered plan account are treated as separate pools, each eligible for up to $1,000,000 in coverage.Correct

   C.CIPF only covers registered accounts; the general account securities are not eligible for protection.

   D.CIPF covers only the first $100,000 in any single account at an insolvent firm.

   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.