On December 11, 2013, the Ontario Ministry of Consumer Services
(the "Ministry") released Ontario Regulation
351/13 (the "Regulation") made under the Payday
Loans Act, 2008 (the "Act"). The Regulation
clarifies that the Act will not apply to most loans made by banks,
loan corporations, insurance companies and credit unions.
Earlier in 2013, the Ministry issued proposed regulatory
amendments (the "Proposed Amendments") to the Act.
Lenders who make loans to borrowers for an aggregate amount of
$5,000 or less would have been subjected to the Act and to the
onerous disclosure requirements, inspections and penalties
The Ministry accepted comments regarding the Proposed Amendments
until September 30, 2013. The recently-issued Regulation appears to
have taken into account the concerns of lenders who would have been
affected had the Proposed Amendments come into force.
Though the Regulation prescribes two categories of loans to
which the Act will now apply, the Regulation carves out a number of
exemptions to ensure that certain lenders and certain types of
loans are not subjected to the Act's application.
Exempted lenders include:
ii. authorized foreign banks or federal credit unions within the
meaning of section 2 of the Bank Act (Canada);
iii. trusts or loan corporations authorized under the Trust
and Loan Companies Act (Canada);
iv. credit unions to which the Credit Unions and Caisses
Populaires Act, 1994 or comparable legislation of another
province or territory applies;
v. registrants under the Securities Act, the Commodity
Futures Act, or comparable legislation of another province or
vi. associations to which the Cooperative Credit
Associations Act (Canada) applies; and
vii. insurance companies incorporated or formed under the
Insurance Companies Act (Canada), and insurers licensed
under the Insurance Act or comparable legislation of
another province or territory.
Exempted loans include:
i. loans for a lease of real property;
ii. loans secured against real property;
iii. if the lender does not have any other such loans
outstanding with the consumer borrower, a consumer loan with only
one advance (where such advance is for a fixed amount that is equal
to the credit granted), a fixed maturity date that is noearlier
than six months after the making of the loan, and with no
requirements for the consumer borrower to pay at least 20% of the
principal amount of the loan in any 30-day period, save for the
last such period; and
iv. agreements under which a consumer borrower acquires goods or
services by way of sale, lease or otherwise (where such goods or
services are not an extension of credit or a loan of money) and
pays for such goods or services by installments or lease payments,
either directly to the provider of the goods or services or to a
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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