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What kinds of financial institutions are there?

There are different types of financial institutions, like banks, credit unions, trust companies, and loan and mortgage companies. All financial institutions in Canada are highly regulated by the government.

The Canadian financial system is one of the fastest and strongest in the world because of our solid policy, regulatory standards, and consumer protection laws. 

All financial institutions provide free information about their services, including account types, features, and debit and credit cards. You can walk into or call any bank and ask about their services. Most financial institutions charge fees for their services and pay interest on the funds they hold. It's always a good idea to compare prices before making a decision.

Bank accounts are necessary in Canada for:

• depositing your paycheck and other government benefits 
• writing cheques
• paying rent
• paying for bills
• saving money

The Office of the Superintendent of Financial Institutions federally regulates banks in Canada. Financial institutions are also protected by the Canada Deposit Insurance Corporation. Your deposits are secured against loss if the financial institution declares bankruptcy. 

Banks

Banks collect money through client deposits. Then, they lend money to borrowers through loans. Banks have a variety of services for individuals and business owners. 

There are five major banks, referred to as “the Big Five,” with branches across most provinces:

• Bank of Montreal (BMO)
• Bank of Nova Scotia (Scotiabank)
• Canadian Imperial Bank of Commerce (CIBC)
• Royal Bank of Canada (RBC)
• Toronto-Dominion (TD) Bank

The list sometimes includes the sixth-largest bank, the National Bank of Canada.

In addition to the major banks, there are also online options. These banks are federally regulated and just as secure, but they tend to have no or minimal banking fees because they operate online only. This includes:

• Tangerine (owned by Scotiabank)
• EQ Bank 
• Simplii Financial
• WealthSimple
• Neo Financial

Try the Bank Account Comparison Tool from the Financial Consumer Agency of Canada to see what option best suits your needs,

Credit Unions

Credit unions, or caisse populaires (the francophone version of credit unions based in Québec), are special banks owned by their members. They offer the same financial services as regular banks. You can get a checking and savings account, loans and mortgages (loans to buy a house), business loans, and investment advice. Banks and credit unions are different because they are owned by the people who use them, called “members.” Every member is a shareholder, and all decisions are made by the credit union's membership. 

Credit unions operate under provincial legislation and regulations and have a board of directors. Members elect a board of directors through a democratic voting system, and the board helps the credit union understand the needs of the members and the community.

The main differences between credit unions and banks are that while you get a lot more personalized customer service and better fees on financial products at credit unions, banks offer a stronger online presence and more access to automated teller machines (ATMs) to their customers.

Visit this list to find all the credit unions in Ontario. 

Trust Companies 

Trust Companies are similar to banks but primarily focus on lending money and acting as trustees for estates and trusts. You would hire a trust company to manage assets for you or a business. Trust companies administer and transfer assets, estates, custodial arrangements, and stocks for their client. For example, as a parent, you can open a trust account for your child's education savings, or an estate can open a trust account to manage its assets. 

Loan and trust companies must be registered in Ontario. You can verify that the trust company is registered in Ontario by researching them on the Loan and Trust Company List from the Financial Services Regulatory Authority of Ontario website.

For More Information

• Banking for Newcomers - If you are new to the Canadian banking system, explore all the banking aspects. From the Canadian Bankers Association.
• Account Comparison Tool- Ask yourself these questions to compare the different chequing and savings accounts from the Financial Consumer Agency of Canada.
• Filing a Complaint about Financial Products or Services - Steps to make a complaint against a federally regulated financial institution. From the Financial Consumer Agency of Canada.
• Banking Basics - Many banking information topics about banking in Canada. From the Canadian Bankers Association.