Changing patterns of credit use among Canadians have prompted the need to modernize laws governing credit. In particular, consumer leasing arrangements, similar to credit arrangements, have become increasingly used as a means of financing automobiles.
In order to keep up with this evolving commercial environment, reduce compliance costs and provide uniform consumer protection across Canada, Ministers responsible for Consumer Affairs agreed to a package of harmonization proposals presented to them at their meeting in Toronto in September 1996. Ministers then tasked the Consumer Measures Committee with developing a technical template expressing the harmonization proposals in sufficient detail to guide legal drafting and with conducting technical consultations with stakeholders.
The objectives of the harmonized laws are those which have guided development of cost of credit disclosure legislation in the past. They ensure that:
- consumers receive fair, accurate, timely and comparable information about the cost of credit in order to obtain the most economical credit for their needs;
- disclosure and disclosure requirements be as clear and simple as possible, given the inherent complexity of the subject matter;
- consumers be entitled to pay off loans (other than mortgages) at any time, and if they do so, incur only those finance charges earned up to the time at which the loan is paid off.
It is also intended that businesses in each jurisdiction will benefit from fairer competition under a uniform set of rules governing all provincially, territorially and federally-regulated lenders and lessors.
Harmonization will apply to all federal and provincial laws governing disclosure of the cost of consumer loans. At the federal level harmonization affects federal financial institutions laws and the Interest Act, while at the provincial level the affected statutes are predominantly consumer protection and financial institutions laws.
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The following jurisdictions have posted legislation or bills containing provisions that relate to Cost of Credit Disclosure Harmonization: (These links are presented for informational purposes only. Please consult individual jurisdictions for current status of any proposed legislation.)
- Federal Government: Bank Act - Cost of Borrowing (Banks) Regulations
- Alberta: Alberta's Fair Trading Act
- British Columbia: See Part 5 of the Business Practices and Consumer Protection Act. Coming into force January 1st, 2006.
- Manitoba: amendments to the Consumer Protection Act passed in June 2005; coming into force to occur with passage of regulations, likely in Spring 2006.
- New Brunswick: Bill 35, Cost of Credit Disclosure Act
- Ontario: implementing through the Consumer Protection Act, 2002, coming into force on July 30, 2005. Please refer to Ontario Statutes and Regulations Web site.
- Saskatchewan: see Cost of Credit Disclosure Act, 2002, Chapter C-41.01; The Cost of Credit Disclosure Amendment Act, 2006, Chapter 5; The Cost of Credit Disclosure Regulations, 2006, Chapter C-41.01 Reg 1. Coming into force October 1, 2006.