# Do you trust People's Trust?



## garreTT (Aug 28, 2013)

After their information got compromised, do you still trust their security? I'm trying to figure out where to put some of my TFSA contributions and where to allocate them effectively. With their TFSA interest rate at 3% it seems to be a likely choice.

Any thoughts?

Thank you,

-Garrett


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## Addy (Mar 12, 2010)

My opinion is they would have learned their lesson the hard way and smartened up. I would consider them at that rate.


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## wendi1 (Oct 2, 2013)

This falls into the "I have no control over this" bucket. Banks, trust cos, retailers, and the like do not pay a lot of money for IT security. In general, your information is out there whenever you pay with anything besides cash.

Make sure your own passwords are good, have more than one (!), don't give out your finance passwords or CC #s to trash sites, check your statements. This, I have control over.


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## fraser (May 15, 2010)

Yes. We have deposits with Peoples but only to the extent of CDIC insurance limits.


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## the-royal-mail (Dec 11, 2009)

wendi1 is right of course.

But to me, the risk and hassle for the added 1-2% is not worth it. I can get 1.25% with my bank. The additional amount of 1.75% in this case is not justified by the hassle and possible expense of moving cash to an unknown vendor, plus the risk.

Yes yes, I know the usual promoters will be here saying "But *I've* had no problems". Those people will be silent when there are problems, and you'll be left holding the bag.

Plus they can easily change their rate at any time.

I wouldn't bother.


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## fraser (May 15, 2010)

It is not clear to me how I would be 'left holding the bag' when dealing with People's, Canada's Western Bank, or other institutions that are CDIC protected? Why would I not want a 50 percent higher return for the same amount of risk and a few keystrokes?


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## CanadianCapitalist (Mar 31, 2009)

the-royal-mail said:


> Yes yes, I know the usual promoters will be here saying "But *I've* had no problems". Those people will be silent when there are problems, and you'll be left holding the bag.


That's a bit unfair. Fans of Peoples Trust were the first to post about the security breach. I actually find the opposite to be true. Brickbats are more likely than bouquets.


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## Video_Frank (Aug 2, 2013)

I use People's Trust to hold my cash portion of my portfolio. I'm getting 1.8%, which is exactly 1.8% more than I was getting at BMo. It was easy to set up, no service fees and the transfers are quicker than my transfers from BMo to BMoIL. With CDIC insurance I'm confident that I'm covered against losses due to hacking. I've received $115.00 in interest in only 5 months so I'm pretty happy.


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## fraser (May 15, 2010)

I am not a particular fan of People's Trust per sae.

I am though, a fan of getting the best rate on the fixed portion of my portfolio. This past year the incremental amount is just under $3K higher than what I would get from the big five-with no apparent additional risk.


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## fatcat (Nov 11, 2009)

traditionally i have been a "hunter" of good rates at these smaller institutions and no longer do so because for me it isn't worth it
i merely _applied_ for a gic online that i didn't ultimately get and my data was stolen 

though i spoke personally with their privacy office who reimbursed my small loss (and was a very decent, helpful and straightforward guy)where i had to pay one of the credit bureaus for a data protection hold 

the thing to remember is that many of these financial institutions are running on software that is very very old in some cases 

i read the other day that even the big banks are still using windows xp 

so i am migrating back to td and tdw 
the rate differential is not worth it to me.

having said that, if you find a great rate you are probably safe.

i wouldn't use peoples financial obviously because of my experience.


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## eulogy (Oct 29, 2011)

I actually just closed my People's Trust account today. I never received a letter stating my information was lost. A small part of my decision was voting with my dollars because of their negligence. But the main reason for me was to just simplify things. Lately I've just got sick of juggling things from credit cards to bank accounts.


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> .... the thing to remember is that many of these financial institutions are running on software that is very very old in some cases
> 
> i read the other day that even the big banks are still using windows xp ....



You mean like 90% of ATMs?

http://ca.finance.yahoo.com/blogs/dashboard/windows-xp-deadline-puts-bank-atms-risk-175152847.html


Cheers


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## james4beach (Nov 15, 2012)

Hacks and comprimises are actually very common occurrences in businesses. It was thoughtful, and honest, of PT to come forward with this disclosure.

(I believe the law requires disclosure once there is a confirmed compromise)

However, there are other financial institutions where a likely compromise would not ever be reported as such and so it looks to the world like no data theft occurred.

Personally, I'm much more concerned about the nature of PT's business and their credit risk than I am about this hack.

Peoples Trust is heavily exposed to mortgages, concentrated in one segment and one geography. I do not personally think they are worth the lending risk, and I don't deposit money with them. I know there's CDIC insurance behind it, but I make a habit of not lending to entitites that I'm concerned about.


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## AltaRed (Jun 8, 2009)

That is a red herring. Many CDIC insured institutions have failed over the years and the insured deposits have been covered. It is an almost seamless transfer of account to the new institution that purchased the deposits of the failed institution. Want interests me more are the rates of interest being offered, efficiency and effectiveness of their services, including their online banking website. 

On the other hand, I would be more skeptical of the deposit insurance backing credit unions. It does not have the same federal guarantee backing up CDIC.


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## fraser (May 15, 2010)

We also deal with Canada Direct, a division of Canadian Western Bank. No issue with the service. Maintain our accounts to below CDIC levels.

As for the nature of business argument, some of our banks are not exactly clean. Do some research on the activities of some of Canada's large chartered banks in the Carribean. There is a reason why, on most islands, you see so many Canadian based banks. And it is not because of the retail banking business. OR do some research on HSBC (the parent), particularly as it pertains to fines and penalties for acting a bank for certain large illegal international terrorist groups. Or their participation in the LIBOR scandals. 

I think that if we pulled back all of the covers on our banks we may not be very impressed with parts of their respective operations/subsidiaries. It is the nature of banks and the banking industry.

I do not need to trust Peoples Trust or any other financial institution that I deal with. That is what we have CDIC for.


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## christinad (Apr 30, 2013)

I just found out you can't electronically withdraw from your TFSA at People Trust - you have to phone to withdraw money. They say it is because it is a registered account. I wasn't really impressed with their security questions. All they asked was what other accounts I held at People's Trust and my account no. with People's Trust. I guess the only damage that could be done is someone could maliciously transfer all the money from my TFSA to my TD account.


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## fatcat (Nov 11, 2009)

christinad said:


> I just found out you can't electronically withdraw from your TFSA at People Trust - you have to phone to withdraw money. They say it is because it is a registered account. I wasn't really impressed with their security questions. All they asked was what other accounts I held at People's Trust and my account no. with People's Trust. I guess the only damage that could be done is someone could maliciously transfer all the money from my TFSA to my TD account.


both peoples trust and _especially_ canadian direct financial have web interface systems that thomas edison would have considered _very_ advanced


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## james4beach (Nov 15, 2012)

I'm not sure you should be so complacent about a bank just because CDIC backs the deposits.

FDIC backed (for example) Indymac in the states too, but it didn't stop people from lining up for hours to get their money out. Why did anyone bother lining up?


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## fraser (May 15, 2010)

I saw a few credit unions go bust while living in BC. The public was not aware of it. Closed on Friday, opened on Monday and announced as an amalgamation with a larger CU. The Superintendent's office usually initiates or orchestrates the merger. It is not sudden..often they are already under some degree of supervision. Few people were aware of the issues. As I recall, the same happened with more than one trust company. They do not go bust as such, but the path appears to be that they are simply merged with another institution, the accounts continue on as before.

We only have deposit accounts. Not worried at all.


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## AltaRed (Jun 8, 2009)

james4beach said:


> I'm not sure you should be so complacent about a bank just because CDIC backs the deposits.
> 
> FDIC backed (for example) Indymac in the states too, but it didn't stop people from lining up for hours to get their money out. Why did anyone bother lining up?


Pure silliness to line up to get money out. FDIC and CDIC have already made arrangements for another institution to pick up the deposits by the time the public becomes aware of the defaulting institution. The money is still there under a new letterhead within a day or two. I have had personal experience with this with a CDIC insured trust company going bankrupt many years ago.


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## fatcat (Nov 11, 2009)

james4beach said:


> Why did anyone bother lining up?


because they were uneducated, uninformed fools 

fdic steps into rescue failed banks all the time, it happens seamlessly, instantly and virtually transparently


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## james4beach (Nov 15, 2012)

One exception to that seamless instant transfer was with "brokered CDs" in the US. The equivalent for us would be GICs held through a brokerage. I also strongly suspect that amounts held in HISAs at a brokerage will be a similar process, meaning a delay in getting your money back.

As I recall, the record keeping gets murky because it's through a broker. This results in a longer process to identify actual owners, and to repay them. You *will* get paid, the question is: how soon?

For instance with HISAs like TDB8150 and the like, there is a co-mingling of funds. The broker has a HISA in their name. First the FDIC/CDIC has to pay out to the broker. Then the broker figures out who has what, subject to what limits. That will take time.

With the FDIC, and it's safe to assume that's a model for CDIC, it can take several weeks or a month or more for the GIC from the failed bank to be paid out by the insurer. References

http://www.bankingmyway.com/save/cd/make-safe-investment-brokered-cds
http://www.fatwallet.com/forums/finance/845334/
http://www.bogleheads.org/forum/viewtopic.php?f=10&t=21099


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## james4beach (Nov 15, 2012)

One lesson from that FDIC case is that deposits held directly with a bank are slightly safer than deposits held through a broker. Added levels of indirection add risk.


 A savings account with a bank is a bit safer than a HISA instrument held at the brokerage
 A GIC held directly with a bank is a bit safer than a GIC held at a discount broker

The yields seem to support this too


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## AltaRed (Jun 8, 2009)

GIC yields with discount brokers are often better than those at the big banks because banks can sucker their unsophisticated customers into accepting less, and they do. Conversely, some online institutions like Home Trust pay more directly than through discount brokers because they do not have to pay the discount broker a commission. The difference in yields has absolutely nothing to do with risk.

HISAs are as good as savings accounts if kept within CDIC insurance limits. The only risk is potential short term delays in access to funds. Surely most people with brokerage accounts would not starve to death or go bankrupt with slight delays in access to funds. Me thinks too much fear mongering.


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## james4beach (Nov 15, 2012)

No, HISA is not "as good as" a regular savings account. HISAs through the brokerage are a different structure than your typical savings account. You've read the disclosure pamphlet, right?

The HISA is an account in the name of the broker, not in your name. All the flows of money go through the broker, which means that the broker needs to do accurate record keeping. There is additional risk of fraud (or negligence). The broker is a middle man; you are trusting that the broker has all the record keeping 100% accurate. The broker is responsible for all cashflows, whether it's interest paid, deposit, withdrawal, or payment in case of bank failure.

The funds of many clients are co-mingled. If there's one thing we've learned from the last few years, it's that co-mingled funds _can_ lead to trouble.

The two big differences I see versus a real savings account are (1) risk of fraud and (2) risk of delays of accessing money. If the broker is fraudulent then they may not have properly allocated your HISA in your name, in which case you're screwed. And risk (2) is what you mentioned, delay in accessing money.

Both are real risks with many demonstrated examples in USA and Europe. How serious they are, is up to your interpretation and how much faith you have in your brokers


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## fraser (May 15, 2010)

We have no concerns whatsoever with our deposits. 

I actually like giving business to institutions that compete with the big banks. We own bank stock but we avoid doing any more business with them than we have to. We even get our cheques printed elsewhere rather than pay double for them at the bank.


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## fatcat (Nov 11, 2009)

james4beach said:


> How serious they are, is up to your interpretation and how much faith you have in your brokers


baloney, it has nothing to do with brokers ....

it comes down to how much faith you have in your political leaders desire to foster and maintain trust in the nations banking system ... let me give you the short answer: a LOT ... they desire this as much as their limos, photo ops and expense accounts with fancy hotel rooms which means ... a LOT

cdic is a mirror of fdic and fdic _falls all over itself_ to make people whole as quickly as possible

recent events should demonstrate how fearful politicians are that their people would, could or should lose faith in the banking system

cdic would move swiftly and loudly to let people know that their deposits were guaranteed

maintaining faith in the stability of the banking system is one of the prime jobs of the canadian political class, it ranks right up there with stopping a zombie invasion dead in its tracks

as usual your comments derive from your base-case assumption of financial armageddon james


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## AltaRed (Jun 8, 2009)

I agree it has nothing to do with brokers (holdings of which are covered from fraudulent activity in any event by the CIPF). Bank backed HISAs, at least from the big 6 or so, are sacred, if nothing else from a reputational perspective. There just are no gremlins under those rocks.


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## fraser (May 15, 2010)

The fear mongering is..well simply silly. To suggest that CDIC insured deposits are not safe or that banks will go bust with line ups down the street makes no sense whatsoever. It did not happen during the Great Depression. 

Some people earn their living by writing about these types of situations. And some readers soak it all in and believe everything that they read...word for word. Notwithstanding whether is stands the tests of logic, history, or just plain common sense.


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## lostwords (Feb 21, 2014)

I am tempted to open an account with People Trust. I would of like them better if they allow for smaller deposits so this way I can set up a bi-weekly deposits. Everyone entitle to do what they wants with their money and everyone values their private information differently. I know some folks that will never give out their credit card for online purchases.


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## Eclectic12 (Oct 20, 2010)

fraser said:


> ... It did not happen during the Great Depression ...


I'm not so sure how much confidence I'd draw the Canada's experience at that time considering that:



> ... These findings support the conclusions of Kryzanowski and Roberts (1993, 1999) that forbearance and window dressing played an important role in preventing the failure of many Canadian banks during the 1920's and 1930's ...


http://spectrum.library.concordia.ca/1915/



> The multinational Sun Life Assurance Company was insolvent at market values in the 1930s as a result of a diminution in the value of its heavy investment in common stocks. Many of its competitors were also insolvent when their asset portfolios are marked to market. Industry-wide forbearance in the form of regulatory accounting window dressing misrepresented true technical solvency and helped Sun Life and a number of its major competitors to remain in business during the Depression years.


http://onlinelibrary.wiley.com/doi/10.1111/j.1936-4490.1998.tb00148.x/abstract


Cheers


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## fatcat (Nov 11, 2009)

Eclectic12 said:


> ... These findings support the conclusions of Kryzanowski and Roberts (1993, 1999) that forbearance and window dressing played an important role in preventing the failure of many Canadian banks during the 1920's and 1930's ...


what the hell, at the ripe old age of 65 I think most of life is powered by window-dressing of one kind or another

recent news about the fed seems to indicate that they were clueless in 2008 and we're hanging their own curtains

though it is true, windows do sometimes break


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## martin15 (Feb 18, 2014)

fraser said:


> The fear mongering is..well simply silly. To suggest that CDIC insured deposits are not safe or that banks will go bust with line ups down the street makes no sense whatsoever. It did not happen during the Great Depression.


But it did happen in Cyprus.
The government initially decided to haircut all bank accounts, the EU even agreed to the plan.
Of course they backed down, and deposits over 100k got hosed, but at the beginning all accounts were at risk.

I do not say for one second that the banking system in Canada is similar to Cyprus, but it is worth remembering that what
everyone thought was safe... wasn't.
CDIC only holds less than 0.5% cash compared to the deposits they have insured.
Any big run on a bank, it will all fall apart.


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## fraser (May 15, 2010)

My view is that as long as I bank within CDIC rules, our deposits are just as safe in Peoples as they are anywhere else.


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## fatcat (Nov 11, 2009)

martin15 said:


> But it did happen in Cyprus.
> The government initially decided to haircut all bank accounts, the EU even agreed to the plan.
> Of course they backed down, and deposits over 100k got hosed, but at the beginning all accounts were at risk.
> 
> ...


good that you note that a banking system in a tiny country like cyprus which was stuffed and bloated with illegal gotten gains by russian oligarchs isn't comparable to a banking system like canada's which has taken years to evolve into one of the best systems in the world

it doesn't matter if the if cdic holds .1% cash ... it is essentially backstopped by us, the canadian people and our elected representatives _all_ of whom have money in this system ... cdic isn't going down no how no way short of an alien invasion ... it would have to be a catastrophe so large that the whole system fails and then all bets would be off

this is all mutating paranoia 

banking systems are roughly equivalent to the stability of governments and should be viewed in the same light

when our system of government starts to look like ukraine, then i start to worry about cdic ....


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## pnky (Jul 16, 2012)

I withdrew my TFSA funds last year for a different reason ( I needed the money), but I am put it back this month with them. I still trust them.

To be on the safe side, I did not fill up the online form but downloaded the form and sent them the hard copy in the mail instead.


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## llagebs (Feb 24, 2014)

fraser said:


> It is not clear to me how I would be 'left holding the bag' when dealing with People's, Canada's Western Bank, or other institutions that are CDIC protected? Why would I not want a 50 percent higher return for the same amount of risk and a few keystrokes?


Exactly. CDIC is the very definition of moral hazard


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> what the hell, at the ripe old age of 65 I think most of life is powered by window-dressing of one kind or another ....


Some believe that Canadian banks / financial institutions were not affected when the research says they were broke. IMO, it's not a good thing to ignore as there are those who are pushing the gov't should not "interfere". The research suggests that if the Canadian gov't hadn't done so - likely there would have been failures and lines.

It's similar to those who have commented that CDIC's coverage should be done away with as it protects executives from their mistakes and there have been one or two financial institutions fail in Canada. Somehow they've missed the fact there have been something like twenty nine failures since CDIC came into being.


Cheers


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## fraser (May 15, 2010)

So, did any depositor loose his or her CDIC insured deposits?

I would hazard a guess that the number of credit unions that essentially failed and were forced to amalgamate by their respective Superintendents is even higher. Do you know of a case where a credit union depositor lost insured funds?


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## Eclectic12 (Oct 20, 2010)

fraser said:


> So, did any depositor loose his or her CDIC insured deposits?


 ... not quite sure what the relevance is when I'm talking about people who want to drop CDIC insurance. 
I'd hazard a guess that without it, people would lose their deposits as happened with the Home Bank failure before CDIC came into being.




fraser said:


> ... I would hazard a guess that the number of credit unions that essentially failed and were forced to amalgamate by their respective Superintendents is even higher. Do you know of a case where a credit union depositor lost insured funds?


 ... I haven't investigated so I'm not sure.


Cheers


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## fraser (May 15, 2010)

The relevance is that people like me would might make different choices if CDIC insurance did not exist.

And if this were the case, the chances of developing any competition to the big banks would be nil. These banks have enough of a monopoly now. 

I strongly suspect that many of the on line banks and many institutions like Peoples who offer deposit rates 50 percent higher than the banks or who offer no fee accounts would not exist.

The original post questioned whether people questioned Peoples Trust. What is not to trust when deposits are insured.

The comment about IT systems is not particularly valid. After spending 30 plus years with various IT vendors, including NCR, I can assure you that there are many banks, financial institutions, and hospitals that use unsupported vendor hardware, firmware, and software in parts of their IT operations each day.


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## Eclectic12 (Oct 20, 2010)

fraser said:


> The relevance is that people like me would might make different choices if CDIC insurance did not exist ...


 ... maybe a good topic for another thread as if there is no CDIC then it's back to the "buyer beware" days like when Home Bank failed.




fraser said:


> ... And if this were the case, the chances of developing any competition to the big banks would be nil. These banks have enough of a monopoly now ...


There were many competitors in the days before CDIC and the move from unregulated private banks to today's gov't regulation. 

I would think the ultimate monopoly was Bank of Montreal in 1817 when it was private and had the exclusive right to issue promissory notes. It wasn't until the Provincial Note Act of 1866 that issuing notes moved from private to the British administration's hands.
http://en.wikipedia.org/wiki/Early_Canadian_banking_system




fraser said:


> I strongly suspect that many of the on line banks and many institutions like Peoples who offer deposit rates 50 percent higher than the banks or who offer no fee accounts would not exist ...


Maybe ... but then again, there was a lot more competition before CDIC existed so the gov't regulations might be the bigger hurdle for competitors. Though - this probably deserves it's own thread.




fraser said:


> ... The original post questioned whether people questioned Peoples Trust. What is not to trust when deposits are insured.


 ... actually - re-reading the OP, the question was more whether the security as well as it's administration was trustworthy and it's all comments that have wandered into CDIC etc.


Cheers


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