Tomorrow (May 1, 2014), the Prepaid Payment Products
Regulations (the "Regulations")
will come into force. The Regulations cover prepaid cards and other
prepaid payment products ("Products")
issued by federally regulated financial institutions, including
banks. These Products are preloaded with funds that can be used by
the product holder (the "Holder") to
purchase goods or withdrawal funds via a payment network such as
American Express, MasterCard or Visa.
The Regulations requires federally regulated financial
institutions that issue Products to disclose in a manner that is
clear, simple and not misleading:
all fees, associated with the Product, in an information box
that appears prominently on the Product's exterior packaging
and other information prior to issuance of the Product;
certain information on the issuance of the Product, including
the Product's terms and conditions, the Holder's rights and
responsibilities with respect to a lost or stolen Product, a
description of how the Holder can verify the balance of the funds
loaded on the Product and a description of how the Holder may, in
certain circumstances, use funds loaded on the Product towards
partial payment of a purchase; and
information directly on the Product pertinent to continued
usage, including the date on which the Product expires (if any),
where to access the full terms and conditions of usage and a
toll-free number to access the remaining balance.
In addition, the Regulations prohibit:
the increase of any fee, or imposing a new fee, associated with
a Product, unless certain conditions are met;
expiry dates on Products, unless it is a promotional
maintenance fees for at least one year after activation of the
Product (with some exceptions); and
charging overdraft fees or interest in respect of a Product
without the express consent of the Holder.
Full details of the Regulation can be found at the following link.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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