Canada: Regulating "Alternative Financial Services" In Ontario

Earlier this month, the Minister of Government and Consumer Services introduced Bill 156, the Alternative Financial Services Statute Law Amendment Act, 2015 (Bill 156). Bill 156, if enacted, would amend the Consumer Protection Act and Payday Loans Act, 2008. Bill 156 also proposes to amend the Collection and Debt Settlement Services Act. For a discussion of the amendments to the Collection and Debt Settlement Services Act, please see our December 2015 Blakes Bulletin: Administrative Monetary Penalties and New Exemptions for Debt Collectors.

Bill 156 was introduced following a consultation paper that was released by Ontario's Ministry of Government and Consumer Services on June 15, 2015. Comments to the consultation paper were due on August 14, 2015. For a discussion of the consultation paper, please refer to our June 2015 Blakes Bulletin: Stronger Protections for Financial Services Consumers in Ontario? in respect of "high cost" financial services, and to our June 2015 Blakes Bulletin: Expanding the Meaning of Debt Collector in Ontario? in respect to debt collection.

AMENDMENTS

Consumer Protection Act

Bill 156 proposes to amend the Ontario Consumer Protection Act (CPA) by adding a new part VII.1., that if enacted, would introduce new rules regarding agreements for cashing government cheques. Bill 156 includes a limit on the fee that may be imposed for cashing a government cheque and a mandatory statutory statement to be provided to a consumer. A government cheque is defined as a cheque issued to a consumer by the Government of Ontario (including a municipal government), a government agency or the federal government.

Subject to certain exemptions, the new part would apply to any consumer agreement under which a supplier cashes a government cheque for a consumer. Specifically excluded from the government cheque cashing rules are an Ontario credit union and a bank (including a bank, authorized foreign bank or federal credit union as defined in section 2 of the Bank Act (Canada)). However, the new part would apply to retail associations and credit unions incorporated in other provinces in Canada.

Limit On Fees

The new part VII.2 would put a limit on the fee that may be imposed for cashing a government cheque. The fee will be fixed by regulations to the CPA (CPA Regulations), which have not yet been released. Bill 156 states that the fee prescribed by the CPA Regulations may be:

  1. A fixed amount
  2. A percentage of the face value of the cheque or any other amount calculated on the basis of the face value of the cheque
  3. An amount that results from the application of any combination of clauses (1) or (2)
  4. Any amount determined by any other prescribed means

Mandatory Statement

Bill 156 would require any supplier under a consumer agreement to which Part VII.1 applies to provide the customer with a mandatory statement of information regarding the cashing of the government cheque. However, we will have to wait for the new CPA Regulations to see the nature and content of this statement.

It would be an offence under the CPA to violate the fee limit or mandatory statement requirements.

Part VIII Leases

Tucked into Bill 156 is an amendment to section 87 of the CPA, which sets out the types of leases to which Part VIII applies. Ontario's leasing regime under the CPA is unique as it contemplates two types of leases: "Part VIII Leases", which require certain cost of credit disclosures, and "Part IV Leases", which do not. Part VIII applies to leases that are:

  1. Leases for a fixed term of four months or more
  2. Leases for an indefinite term or that are renewed automatically until one of the parties takes positive steps to terminate them
  3. Residual obligation leases

Bill 156 adds to this list "such other leases that are prescribed." This amendment suggests that additional types of leases will be added to Part VIII. We will have to wait for the CPA Regulations to know which additional types of leases may fall under Part VIII, thus requiring certain cost of credit disclosures.

Future Amendments?

Certain items mentioned in the government news bulletin are not addressed in Bill 156. However, new regulation making powers provided for in Bill 156 suggest that the new CPA Regulations may deal with these matters, including:

  • Grace periods for repayment on rent-to-own services
  • Limits on the costs of optional creditor's insurance for instalment loans

The amendments to regulation making powers also include a long list of other powers, many of which deal with leasing.

Payday Loans Act

Bill 156 also proposes to amend the Payday Loans Act, 2008. If enacted, the bill would amend the restrictions applicable to replacement payday loans and add restrictions that apply to a third payday loan agreement. Bill 156 would also permit the registrar to conduct inspections if he or she reasonably believes that a person or entity is acting as a payday lender or a loan broker without a licence.

Restrictions Applicable To Third Payday Loan Agreement

Bill 156 would restrict the terms of a third payday loan agreement.

If a borrower enters into a third payday loan agreement within 62 days of having entered into a first payday loan agreement, the lender would be required to ensure that:

  1. The term of the third payday loan agreement is at least 62 days
  2. The agreement provides that the borrower is required to repay the advance
  3. The agreement provides that the cost of borrowing must be repaid to the lender in the prescribed number of instalments and at the prescribed times

As with the changes to the CPA, further details will be set out in regulations (PLA Regulations) that have not yet been released. We will have to wait for new PLA Regulations as to the number of instalments and timing of same.

Despite this, if a third payday loan agreement includes a provision described in sections (b) and (c), above, the lender would be entitled to receive and demand payment of a portion of the cost of borrowing from the borrower before the end of the term of the loan.

Further Restrictions On Replacement Payday Loans

Bill 156 provides that the PLA Regulations may prescribe a time period after which a new payday loan may be entered into. Under the current Payday Loans Act, a lender cannot enter into a new payday loan agreement until at least seven days have passed since the borrower has paid the full outstanding balance under the first agreement. However, a lender may enter into a new payday loan agreement before the seven days have passed if the borrower has provided the lender with proof that the borrower has paid the full outstanding balance under the first agreement.

Bill 156 would amend the Payday Loans Act such that a lender under a payday loan agreement would be prohibited, in all instances, from entering into a payday loan until at least seven days (or a prescribed number of days) has passed since the borrower paid the full outstanding balance under the first agreement.

Amendments to the regulation making powers of the minister include powers that may significantly impact the number of payday loan agreements into which a lender and borrower may enter. Bill 156 permits the minister to make the PLA Regulations:

  • Prohibiting a lender from entering into more than the prescribed number of payday loan agreements with the same borrower in a one year period
  • Prohibiting a loan broker from facilitating more than the prescribed number of payday loan agreements between the same borrower and different lenders in a one year period

Bill 156 also permits the minister to make the PLA Regulations prohibiting licensees from offering or providing prescribed goods or services, other than payday loans, to anyone. It is unclear what these goods or services will be.

Inspections Of Non-Licensees

Included in Bill 156 is an amendment that allows the registrar certain investigative powers. If the registrar has reasonable grounds to believe that an activity for which a licence is required is occurring, the registrar or its designate may conduct an inspection. The amendments would include power to enter and inspect at any reasonable time the business premises of a person or entity, other than any part of the premises used as a dwelling, for the purpose of determining whether the person or entity is carrying on the activity.

WHAT'S NEXT?

Bill 156 was carried on first reading on December 9, 2015. The Legislature adjourned on December 10, 2015 and will resume on February 16, 2016, after which the bill will be up for second reading.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions