Deposit-Type and PPN Definition Update

Summary#

The government registered final regulations that update the Principal-protected Notes Regulations and the Deposit-Type Instruments Regulations on October 25, 2024 (published November 6, 2024). The changes update wording and definitions so that variable-rate term deposits tied to modern benchmark rates such as CORRA are clearly treated as deposit-type products, keeping existing consumer protections in place after the end of CDOR on June 28, 2024.

What it does#

• Changes the English titles to Principal-protected Notes Regulations and Deposit-Type Instruments Regulations (hyphenation only).
• Replaces the old regulatory definitions so they now refer to the equivalent definitions in the Bank Act:
  • The term “principal-protected note” now has the same meaning as in the Bank Act.
  • The term “deposit-type instrument” now has the same meaning as in the Bank Act.
• Adds an “interest rate benchmark” definition that follows the Bank Act wording.
• Updates several rule sections to use “prime lending rate or interest rate benchmark” instead of “bankers’ acceptance rate”.
• Clarifies that products whose variable return is tied to benchmarks like CORRA are captured as deposit-type instruments, not as principal-protected notes.
• Takes effect on the day the regulations were registered: October 25, 2024.

Who's affected#

• Federally regulated financial institutions, including banks, trust and loan companies, and cooperative credit associations.
• People who buy or hold low-risk term deposits such as guaranteed investment certificates (DTIs) and investors in principal-protected notes (PPNs).
• The Financial Consumer Agency of Canada (FCAC), which continues to monitor compliance.
• If it is unclear who is affected in a specific case (for example a new product design), the rule changes are meant to remove that uncertainty.

Why it matters#

• The benchmark used to set many variable interest rates changed when CDOR stopped on June 28, 2024 and markets moved to CORRA. The old rules still talked about “bankers’ acceptance rate,” which could have left CORRA-linked products in a legal gray area.
• These amendments are a technical fix to make sure CORRA-based variable-rate term deposits stay treated as deposit-type instruments. That keeps consumer protections that apply to DTIs, such as the 10-business-day cancellation right when a DTI is automatically renewed.
• The change is meant to be clarifying and not to add new costs or new consumer rules.