“Canada Deposit Insurance Corp. members should improve warnings in the materials they sell rather than waste money making up for their mistakes through media advertisements,” says Tom Hockin, president and CEO of The Investment Funds Institute of Canada.

IFIC has requested that the CDIC stop a series of ads targeting mutual funds as an investment not covered by insurance. IFIC says that the newspaper and television ads in effect encourage people to invest only in bank accounts and GICs, which now pay some of the lowest returns in modern history. IFIC registered its concern in a letter sent last week to CDIC chair Ron Robertson.

“We request that CDIC stop the targeting of mutual funds in its advertising,” said Hockin in the letter. “We have received reports of clients and investors calling their financial advisor because of fears created by these ads. Surely this is not a responsible approach by an agency of our federal government.”

“CDIC insurance needed for deposits is not relevant to mutual funds,” added Hockin. His letter points out “You will know that securities held in mutual funds are held in trust by independent trust and custodial companies on behalf of the investor. The financial failure of the selling institution would in no way threaten the ownership or the value of the mutual fund assets held by the client. This fact mitigates the need for any CDIC style of protection. As proof of this, the CDIC has recently reminded deposit-taking members that since 1967 it has dealt with the failures of 43 financial institutions and paid out $24 billion to depositors. In contrast there has not been a failure of a mutual fund management company.”