SHOW HIM THE MONEY

Ellen Roseman tells a tale of how one man fought to cash a 26-year-old CIBC cheque, and won,

Anthony Waldron was doing his 2016 taxes when he started rummaging through a drawer.

Instead of the tax slip he wanted, he found a CIBC cheque for $9,115.55 that was never cashed.

The cheque dated back to 1991, when a guaranteed investment certificate he had purchased from CIBC reached the end of its term and stopped paying interest.

Talk about inattention. When given a large amount of his own money, Waldron had put it away and forgot about it.

But despite the quarter century that had elapsed, he was determined to get his funds back. And he did eventually, though the process took a couple of months.

On March 15, he deposited the cheque at a CIBC branch close to home. The transaction was reversed within days.

“I received a returned item notice and copy of my cheque, showing the money was taken out of my account,” he said.

“The reason given was ‘cannot trace.’ I don’t understand, since this was CIBC’s cheque payable to me.”

By April 11, when he wrote to me, Waldron was still waiting to be reimbursed.

Now a retiree on a fixed income, he regretted his mistake, but felt he couldn’t walk away from his own money.

Making sure the cheque was legitimate and preparing it for clearing obviously took time. Many CIBC staff members were involved.

A case like this makes you wonder about the rules for cashing older cheques, known as stale-dated cheques in the banking industry.

“Cheques are considered stale-dated after six months, unless certified,” says Payments Canada, the agency delegated by the government to help meet payment needs and usher in a new era of electronic payments.

“A stale-dated cheque simply means that the item is old and not necessarily invalid. Financial institutions may still honour these items, but there is no obligation to do so.”

Government of Canada cheques are an exception. They never become staledated. Your financial institution can confirm they are still valid.

If money is left in a dormant bank account for 10 years, a financial institution will turn it over to the Bank of Canada.

For balances of less than $1,000, the Bank of Canada’s holding time is 30 years. For balances of $1,000 or more, the holding time is 100 years.

And if a balance remains unclaimed until the end of the custody period, the Bank of Canada will transfer it to the federal government’s coffers.

The Bank of Canada held approximately 1.8 million unclaimed balances, worth $678 million, at the end of 2016.

Did Waldron’s cheque from CIBC with the proceeds from his matured GIC go to the Bank of Canada?

When told the money stayed in Toronto, he was even more upset and kept writing to CIBC, including to chief executive Victor Dodig, complaining about the delay.

Finally, on May 16, he was asked to sign a form and return it to the bank. Two days later, the $9,155.55 was put back into his account.

“Mr. Waldron is a long-time client and we are glad we were able to resolve the issue,” CIBC spokesperson Caroline Van Hasselt said. “We encourage all our clients to maintain their investment records and come into a banking centre when their deposits mature.”

There’s good news for the forgetful. CIBC has a new policy for newer GICs.

If a GIC is not redeemed at the end of the term, the bank will deposit it into your bank account or roll it over automatically upon maturity into another GIC.

Waldron paid a huge penalty for his inattention. He lost the opportunity to reinvest the GIC proceeds for 26 years.

What was the lost opportunity cost? I used the Bank of Canada’s investment calculator to find an answer.

If he earned an average 3 per cent on his GICs from 1991 to 2017, his $10,000 would have grown to $21,566. At 4 per cent, his $10,000 would have grown to $27,725.

You can choose an annual inflation rate — say 2 per cent — to see the total interest earned after inflation.

With a 4 per cent GIC interest rate and 2 per cent inflation, Waldron would have earned $10,592 in interest over the 26year period — a doubling of his money that he missed.

My advice: Open drawers, files and envelopes every year at tax time. Twice a year is better. Dump the contents, sort out what you need to keep and shred the rest. This is the third in a series of columns on banking disputes, with more stories of resolved complaints to come. Please keep sending them to eroseman@thestar.ca. Ellen Roseman appears in Smart Money.