Money Tips | Financial Crooks

As I discussed in my article reviewing what places are offering GICs and at what rates, Oaken Financial (Home Trust) is offering one of the best rates currently for a non-registered GIC and only requires a $1 000 minimum investment. Since I want to put some of emergency fund to work, and since the rates offered by Home Trust for GICs at BMO InvestorLine has consistently been very good, I have decided to put some of our money into GICs at Oaken Financial.

How Do I Like Dealing with Oaken Financial?

Having just mailed in my application, I must say it’s incredibly easy to set up a savings account and buy a GIC. And I never had to sit waiting in a vinyl chair or get forced to listen to a sales pitch to buy mutual funds or apply for credit cards.

When I had a question about whether I had to supply a void cheque and a payable cheque, my phone call was answered promptly and courteously. (No one even said: “What? Can’t you read?”)

I’m now testing their email response time. (See the last item in this article about cashable GICs for the details.)

Why Not Use a Non-Registered Brokerage Account to Hold All My GICs?

I could, of course, mix our emergency fund money with our non-registered long-term investment money in our brokerage account and then buy GICs inside that brokerage account. So why don’t I?

I can get a higher rate outside of the brokerage account. Right now I can get a rate of 2.15% (actually 2.40 % till December 19 2014!) on a one-year GIC purchased from Oaken.
I can only get 1.81% (today) at my brokerage. If I wouldn’t accept paying 0.34% more MER for an ETF, why would I accept 0.34% less interest on my GIC? And if I buy one during the bonus high rate period, I will get an additional 0.59%!
I can get a higher rate on any cash than in my brokerage account AND then in my daily interest savings accounts at Tangerine and PC Financial once they are not offering promotional higher interest rates again. And I wouldn’t mind having another option if rates continue to drop at Tangerine and PCF.
I only need to invest $1 000 per GIC. Since I want to stagger the maturity dates to have one maturing each month (this is our emergency fund money after all!) I can’t justify investing monthly at the $5 000 minimum our brokerage requires. (Some brokerages may have a lower GIC requirement.)
I can get an excellent rate on a cashable GIC as well, if desired.
There is no minimum balance requirement to avoid fees. Our brokerage account requires at least $10 000 to avoid fees. (In our case, this isn’t really an issue but it could be for others.)
It’s nice to have the emergency fund separate from the long-term investing fund even though it’s not necessary.
I like fiddling around with stuff like this.

Opening a Bank Savings Account at Oaken Financial

What Do I Need to Know to Apply to Open a Savings Account at Oaken Financial?

I’m going to open a joint savings account because this is for our emergency fund. You may need less info if you’re opening a single owner savings account.

The usual id info:

your full name
your date of birth
your address
your social insurance number, SIN
Your email address

Wow! This one is a new one for me:
The answer to this question:
Do you or any of your family member(s) hold or have ever held or is a close associate to one of the following positions?
A head of state or head of government; member of the executive council of government or member of a legislature; deputy minister or equivalent rank; ambassador or attaché or counselor of an ambassador; military officer with a rank of general or above; president of a state-owned company or a state-owned bank; head of a government agency; judge; leader or president of a political party represented in a legislature.

I wonder how many people can answer “yes” to that one?!

You need to know they are going to do a credit check on you which will usually lower your credit rating temporarily.

You need to know they will be checking on the cheque you submit to confirm your identity.

If buying a GIC, you can choose where the money will go when the certificate matures. You can choose separately whether the interest and/or principal are

renewed at maturity
deposited in your Oaken savings account
direct deposited at another Financial Institution
paid to you by cheque

You need to provide a void cheque for the direct deposit option. Strangely enough, you have to send a void cheque even if you are sending a payable cheque from the same account to make a deposit and to buy a GIC! So I will have to send one payable cheque for the amount I want to deposit plus the amount I want to use to buy a GIC immediately and a second void cheque to link my accounts for future transfers.

What If I Don’t Have a Cheque I Can Send to Link My Account?

A reader asked whether one has to provide a void cheque or if anything else can be used to link the account. I wrote an email to Oaken and they replied promptly:

“If you do not have cheques available for the account you wish to link, please provide us with proof of the account. Most banks will provide a verified pre-authorized debit agreement that has your name, address and banking information printed on it.”

I believe this is because Oaken is using the cheque to also authenticate your identity as well as to link the accounts. Because you are not visiting a branch and providing your id in person, they are using the cheque from a bank as a safety control on who they authorize to open a new account. They are expecting the bank that issued you the cheques to have already confirmed your identity by providing proper photo id etc.

You can always give Oaken a call to confirm exactly what they require if you have any doubts.They seem very approachable.

How to Get the Application Form

First I checked that the deposits would be CDIC insured up to $100 000. Yes. Good. Remember Oaken is just a trademark, the company is Home Trust.

Go to the Open an Account page.

Ok, I can set up the account by mail, phone or in person if I live near one of the few branches.

I’ll choose by mail since Canada Post is still delivering to my home for another few months. And I want to mail a cheque in to get the first GIC purchased as soon as possible.

Click on the By Mail tab.
Click on the PDF icon beside Personal savings account & GIC non-registered investment application.
Unless you want to print all the terms and conditions and whatnot, click on the Save icon and store a copy of the blank application form with all the details with your other financial records.
Make darn sure you read all of those details BEFORE you apply!
The application starts on page 2. At the top of that page is a Print Form button. Click on the button. Rats. It still wants to print all 6 pages. Either let it do that, or on the Pages to Print section of your Print window, change the selection to Pages 2 – 3

Where to Send the Application Form

Check for the current mailing address on the Oaken Financial website. I’d put the address here, but if it changes and I don’t update in time I will be causing you a hassle. Instead, I’ll give you the link to their mailing address.

Be sure to include

A payable cheque if you want to invest immediately.
A void cheque if you want to link to your other bank account, EVEN IF you are sending a payable cheque drawn on the same account!

How Long Will It Take to Open a Savings Account at Oaken Financial?

Well, they *say* it should take about 10 business days after they receive the application.
I’ll let you know how long it takes for my account with an update.

What Fees Does Oaken Charge for a Savings Account?

This is a true savings account. You can’t really do anything much with it. You can transfer money in or out once you have connected it to an account at another bank. You can’t withdraw at an ABM because they do not have any. I don’t think you can ask them to send you a cheque for your money either, unless it is for a maturing GIC.

That said, the fees listed on their site are:

Free paperless (online) statement or $2/month for a monthly paper statement
Retrieval of a past statement older than 14 months: $5 per statement
Bounced cheque that they could not deposit successfully into your account or use to buy your GIC: $20
Here’s the only fee that might be surprising:
Dormant account fee: $20 per year. If you do not perform an “activity” with your account for 2 or more years, you will be charged $20 per year starting the January 1 after the second year of inactivity. NOTE: you can transfer a few cents in and out of your account each year to keep it active.

For those of you following my Tangerine fee question, I noticed that Oaken states clearly in their non-registered account terms and conditions that they will provide 30-days written notice of new or increased fees before the effective date.

Can an Oaken Financial Cashable Non-Registered GIC Really Be Cashed?

While reading all 3 pages of the fine print that accompanied my application form to open a Savings account at Oaken, I found the following surprising clause:

“A Cashable GIC is fully or partially redeemable (minimum $5000 redemption request accepted and $5000 must be maintained in the Investment) prior to the Maturity Date only after the redemption eligibility period indicated on the Investment application form has been met.”

I have emailed Oaken to ask them whether this is outdated and needs to be updated or whether it is correct. The minimum purchase amount for a cashable GIC is $1 000 so I don’t know why they are referring to $5 000 and $10 000 amounts in this clause.

I will provide an update with this information when they get back to me.

UPDATE: Well that was fast! Within 24 hours, they responded that yes, it’s a typo based on outdated information. The minimum redemption request is $1 000. They will update their terms within the next two weeks.

Progress Updates:
November 21: Dropped my application and cheque into the big red Canada Post mail box. Who knows when they will clear the box!
November 26: My cheque cleared my “big bank” so the money should be on its way into my new account at Oaken.

Related Reading

How to Open a Chequing Account at Tangerine
How to Open a Savings Account at PC Financial

Join In
Have you used Oaken Financial for your savings or your GICs? Any horror stories I should know about? Has it been acceptable? Please share your views with a comment.

Although I have yet to receive a notice from Tangerine either by email or by the message system they use within your bank account online, it appears to be official that Tangerine will be charging a $45 fee to transfer out your RRSP or TFSA balance.

UPDATE: I received a email notice inside my Tangerine account messages section on December 20 that advised that as of January 19 2015 I would have to pay a $45 fee to transfer out a RRSP or TFSA.

I updated my website with warnings when the rumour of this fee first appeared back in mid-October 2014. To date, I still have received no information directly from Tangerine about this new fee.

Tangerine Will Charge a $45 Fee to Transfer Out a RRSP

In the Frequently Asked Questions on the Tangerine site, it says they charge $45 to transfer out a RRSP. It does not say when this new fee is applicable! I was told on the phone that it would be in January 2015 but that is not clear here.

Will Tangerine Charge a Fee to Transfer Out a TFSA?

At this point, Tangerine has not yet said anything about a TFSA transfer out fee on their website. Nor have I received any notice by mail, email or message.

For a TFSA, one way to avoid a fee is to wait till December. Instead of transferring your funds, withdraw them. Then on January 1 of the next year and NOT BEFORE you can contribute them into your TFSA at another institution. If you deposit them in the same year you withdraw them you will be fined 1% a month by the CRA. You MUST wait till January 1 of the next year.

Will Tangerine Now Refund a Fee Charged by Another Bank for Transferring a TFSA or RRSP into Tangerine?

In the past, I moved a cash RRSP into Tangerine (when it was called ING Direct.) I asked if they would pay me back the fee that the other bank charged me for moving out my RRSP. They replied that because they did not charge a fee for transferring a RRSP away from Tangerine, they also would not pay a refund for a fee charged for transferring a RRSP in to Tangerine.

So has that now changed? Will they pay up to $45 to cover the fee paid to transfer a RRSP from another bank into Tangerine?

I’ve sent that question to Tangerine and will update this article when they reply.

UPDATE: Ok the reply so far is not encouraging. I emailed to inquire and was told that because I have an account with Tangerine I have to phone them to discuss this. That suggests they don’t have a formal policy yet although if you are interested in transferring in, I would suggest you call and see if they will reimburse your fee.

The worrying part was they also said that owners of registered products had been notified of the “transfer out” change via the messaging system within their account. I have several registered products and have not received any type of notice!

I’ll provide additional updates if/when I can get them.

Can Tangerine Start Charging a Transfer Out Fee Without Any Formal Notice to Customers?

Usually banks warn you a few weeks or months ahead of time when they are changing their fees.

So far I have not received any notice from Tangerine about this new fee. I have not received a letter, an email, a message when I sign in to my accounts, a message on the message system inside my account, or even a few words written in my October banking statements about it.

Do they have to give notice of this fee?

That’s hard to find out! In the USA, they clearly do. The US Government Consumer Financial Protection Bureau website says “a bank or credit union can start charging you fees…[if they notify] you in writing at least 30 days before it starts charging fees….”

I wrote the Canadian Bankers Association, CBA, on November 18, 2014 to ask if there is any required notice for new fees. Unfortunately, they chose to respond that I should direct my question to the federal government’s Financial Consumer Agency.

The (federal) Department of Finance Canada appears to be working on a new Financial Consumer Protection framework, judging by a consultation paper from December 2013 posted online. It’s not clear to me whether this is one of the issues that may be included.

I will update this article if I get any further information about requirements from the Financial Consumer Agency.

UPDATE 1: They have replied that I should expect to wait 10 business days for a reply.