Principal Protected Notes: know your rights

A principal protected note (PPN) is a type of financial instrument that is issued in Canada by an institution to an investor and provides that:

Your right to information before you buy a PPN

Federally regulated financial institutions must disclose certain information to you before entering into an agreement with you. They must do so verbally and in writing (paper or electronically, if you agree to receive information this way).

They must disclose the information at least 2 days before entering into the agreement with you.

They’ll disclose information such as:

They must provide the information in a manner, and using language that is clear, simple, and not misleading.

They must disclose the information by making it available:

Exceptions to information if you buy a PPN in person

If a federally regulated financial institution other than a bank issued your PPN they can provide the information listed above any time before you enter into an agreement to purchase a PPN. That’s if you and the institution expressly consented to it.

Exceptions to information if buy a PPN electronically

When a federally regulated financial institution enters into an agreement for a PPN electronically, there are 2 scenarios for providing information:

1. Some institutions have made a public commitment to give you 2 or more days to cancel the purchase. This may be after the date of purchase or after you received the disclosure statement that explains the investment.

In this case, they don’t have to provide the information verbally, only in writing. They may do so anytime before entering into the agreement.

They must provide the telephone number of a person who is knowledgeable about the terms and conditions. This is before entering into the agreement, or without delay after.

2. Some institutions didn’t make this public commitment. They don’t have to provide the information verbally either, only in writing. They must do so at least 2 days before selling the PPN, depending on the institution you’re dealing with. 

They must also provide the telephone number of a person who is knowledgeable about the terms and conditions

Exceptions to information in you buy a PPN over the phone

Your institution may have made the public commitment noted above. If so, they must disclose the information listed above to you verbally before entering into an agreement for a PPN. They must disclose it to you in writing without delay after entering into the agreement.

Your right to information after you enter into an agreement for a PPN

Once you’ve entered into an agreement for a PPN with a federally regulated financial institution, they must disclose to you:

Information about advertising PPNs

A federally regulated financial institution that advertises PPNs must disclose to the public how it can get information about it.

If an advertisement refers to features of the product or interest payable under it, the institution must disclose:

Learn more about other types of investment and the basics of investing.

When these rights apply to you

These rights apply when you’re dealing with a federally regulated financial institution like a bank or federal credit union.

Find out if your financial institution is federally regulated.

Learn more about how your banking rights are protected.

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