Index-linked Deposits Interest Disclosure Regulations
SOR/2002-102
COOPERATIVE CREDIT ASSOCIATIONS ACT
Registration 2002-02-28
Index-linked Deposits Interest Disclosure Regulations
P.C. 2002-273 2002-02-28
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 459.4Footnote a and 576.2Footnote b of the Bank ActFootnote c, section 385.28Footnote d of the Cooperative Credit Associations ActFootnote e and section 444.3Footnote f of the Trust and Loan Companies ActFootnote g, hereby makes the annexed Index-linked Deposits Interest Disclosure Regulations.
Return to footnote aS.C. 2001, c. 9, s. 125
Return to footnote bS.C. 2001, c. 9, s. 159
Return to footnote cS.C. 1991, c. 46
Return to footnote dS.C. 2001, c. 9, s. 313
Return to footnote eS.C. 1991, c. 48
Return to footnote fS.C. 2001, c. 9, s. 548
Return to footnote gS.C. 1991, c. 45
Interpretation
Marginal note:Definitions
1 The following definitions apply in these Regulations.
deposit index
indice de dépôt
deposit index, in relation to an index-linked deposit contract, means a market price, exchange rate, reference rate or other variable index or reference point, referred to in paragraph (a) of the definition index-linked deposit contract, in reference to which the interest under the contract is to be determined in whole or in part. (indice de dépôt) (indice de dépôt)
index-linked deposit contract
contrat de dépôt indiciel
index-linked deposit contract means the contract, between a person and an institution, that contains the terms and conditions in respect of money that the person deposits with the institution if,
(a) a payment that is to be made by the institution in respect of the money deposited is to be determined, in whole or in part, by reference to
(i) the market price of a security, commodity or financial instrument,
(ii) the exchange rate between any two currencies,
(iii) a reference rate determined by reference to any one or more of those prices or rates, or
(iv) any other kind of variable index or reference point that may be described in rules prescribed by the by-laws of the Canada Deposit Insurance Corporation under subsection 14(2.51) of the Canada Deposit Insurance Corporation Act; and
(b) the principal amount of the institution’s indebtedness that the institution is obligated under the contract to repay in respect of the money deposited is equal to or more than the total paid to the institution under the contract. (contrat de dépôt indiciel) (contrat de dépôt indiciel)
institution
institution
institution means
(a) a bank, as defined in section 2 of the Bank Act;
(b) an authorized foreign bank, as defined in section 2 of the Bank Act;
(c) a retail association, as defined in section 2 of the Cooperative Credit Associations Act; or
(d) a company, as defined in section 2 of the Trust and Loan Companies Act. (institution) (institution)
interest
intérêt
interest, in relation to an index-linked deposit contract, includes any return payable under the contract by an institution in respect of the principal of the amount deposited under the contract. (intérêt) (intérêt)
Disclosure
Marginal note:Written disclosure
2 (1) Subject to subsection (4), an institution that enters into an index-linked deposit contract with a person must, at or before the time of entering into the contract, give the person a written statement that clearly states, in plain language,
(a) the way in which interest is to be determined under the contract;
(b) a description of the deposit indexes under the contract;
(c) a description of any limitations in respect of the interest payable under the contract, and the impact of those limitations on the rate of interest, including
(i) any limitation on the amount or rate of interest,
(ii) any limitation on the extent by which the interest increases by reference to a deposit index under the contract, and
(iii) any averaging that is taken into account when determining the interest payable under the contract by reference to changes in the deposit indexes;
(d) the frequency of the payments of interest under the contract and any options available for the payment of interest during the term of the contract;
(e) that no interest is payable under the contract if there is no increase in a deposit index under the contract;
(f) if the contract provides that minimum interest is payable, that no additional interest is payable under the contract if there is no increase in a deposit index under the contract;
(g) any other circumstances that may affect the interest payable under the contract;
(h) that the money deposited under the contract may not be withdrawn until the end of the term of the contract, or, if the contract provides any rights for earlier withdrawals, what those rights are;
(i) that the principal of the amount deposited under the contract will be repaid on the maturity date under the contract; and
(j) the maturity date under the contract.
Marginal note:Statement may be part of contract
(2) The written statement referred to in subsection (1) may be a part of the proposed index-linked deposit contract or it may be a separate document.
Marginal note:Disclosure by telephone
(3) If an institution enters into an index-linked deposit contract with a person by telephone and the institution has not already complied with subsection (1) in respect of the contract, the institution must, at the time of entering into the contract, clearly state to the person by telephone, in plain language,
(a) the name of the deposit indexes under the contract;
(b) that changes in the deposit indexes under the contract may affect the interest payable under the contract;
(c) whether there are any limitations referred to in paragraph (1)(c) in respect of the interest payable under the contract, and if there are any, what those limitations are;
(d) that no interest is payable under the contract if there is no increase in a deposit index under the contract;
(e) if the contract provides that minimum interest is payable, that no additional interest is payable under the contract if there is no increase in a deposit index under the contract;
(f) that the money deposited under the contract may not be withdrawn until the end of the term of the contract, or, if the contract provides any rights for earlier withdrawals, what those rights are;
(g) that the principal of the amount deposited under the contract will be repaid on the maturity date under the contract;
(h) the maturity date under the contract;
(i) a description of any right under the contract to rescind the contract;
(j) the date on which the calculation of interest will begin under the contract; and
(k) that the institution will send to the customer by mail the written statement required by subsection (1).
Marginal note:Sending of notice
(4) If an institution enters into an index-linked deposit contract with a person by telephone and the institution has not already complied with subsection (1) in respect of the contract, the institution must, as soon as possible after entering into the contract, send the person the written statement described in subsection (1) and a written statement telling the person the date on which the calculation of interest will begin under the contract.
Marginal note:Advance disclosure of changes
3 If the terms and conditions of an index-linked deposit contract allow the institution to make any changes in respect of the determination of interest payable to a person under the contract, the institution must disclose any of those changes that is a material change before making it — or, if that is not possible, as soon as possible after making the change — by describing it clearly, in plain language, in a written statement delivered to the person.
Marginal note:Disclosure in advertisements
4 In each advertisement by an institution in respect of index-linked deposit contracts, the institution must disclose clearly, in plain language,
(a) if the advertisement refers to features of the contracts or interest payable under the contracts,
(i) that changes in deposit indexes under the contracts may affect the interest payable under the contracts,
(ii) whether there are any limitations referred to in paragraph 2(1)(c) in respect of the interest payable under the contracts, and if there are any, what those limitations are,
(iii) if the advertisement gives an example of a situation in which interest would be payable under the contracts, an example of another situation in which no interest would be payable under the contracts,
(iv) if the advertisement gives an example of a situation in which additional interest would be payable under the contracts, an example of another situation in which only the minimum interest would be payable under the contracts,
(v) that the principal of the amount deposited under the contracts will be repaid on the maturity date under the contracts, and
(vi) that the information set out in paragraphs 2(1)(a) to (j) is available to the public and how the public may obtain it; and
(b) if the advertisement does not refer to features of the contracts or interest payable under the contracts, how the public may obtain more information about the contracts.
Coming into Force
Marginal note:Coming into force
5 These Regulations come into force four months after the day on which they are registered.
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