Answer ... (a) Mortgage lending?
Federal statutes - including the Bank Act, SC 1991, c 46 (Bank
Act) and its regulations, and the Trust and Loan Companies Act, SC
1991, c 45 (Trust and Loan Companies Act) and its regulations - set
out a number of consumer protection provisions applicable to
federally regulated mortgage lenders. The applicable provisions set
out requirements relating to issues such as:
- credit business practices;
- disclosure requirements regarding charges;
- the cost of borrowing;
- prepayment and interest;
- notice requirements;
- complaints; and
- the establishment of consumer-focused procedures.
The Financial Consumer Agency of Canada (FCAC) has oversight of
federal consumer protection legislation applicable to federally
regulated financial institutions, including provisions of the Bank
Act, the Trust and Loan Companies Act and their regulations.
Furthermore, mortgage lending by provincially regulated entities
is governed by consumer protection legislation and/or mortgage
brokerage legislation, depending on the jurisdiction (ie, credit
unions and private lenders), as follows:
- British Columbia: the Mortgage Brokers Act, RSBC 1996, c
313;
- Alberta: the Real Estate Act, RSA 2000, c R-5;
- Saskatchewan: the Mortgage Brokerages and Mortgage
Administrators Act, SS 2007, c M-20.1; the Trust and Loan
Corporations Act, 1997, SS 1997, c T-22.2;
- Manitoba: the Mortgage Brokers Act, CCSM c M210;
- Ontario: the Mortgage Brokerages, Lenders and Administrators
Act, 2006, SO 2006, c 29; Quebec: the Civil Code of Quebec, CQLR c
CCQ-1991;
- Newfoundland and Labrador: the Mortgage Brokers Act, RSNL 1990,
c M-18;
- Nova Scotia: the Mortgage Brokers and Lenders Registration Act,
RSNS 1989, c 291;
- New Brunswick: the Mortgage Brokers Act, RSNB 2014, c 41; Cost
of Credit Disclosure and Payday Loans Act, SNB 2002, c C-28.3;
- Prince Edward Island: the Business Practices Act, RSPEI 1988, c
B-7; the Consumer Protection Act, RSPEI 1988, c C-19; the
Unconscionable Transactions Relief Act, RSPEI 1988, c U-2;
- Yukon: the Consumers Protection Act, RSY 2002, c 40;
- Northwest Territories: the Consumer Protection Act, RSNWT 1988,
c C-17; the Cost of Credit Disclosure Act, SNWT 2010, c 23;
and
- Nunavut: the Consumer Protection Act, RSNWT (Nu) 1988, c
C-17.
The licensing and registration requirements vary by province
with respect to the lending, brokering and administration of
mortgages on property in that province. There are nuances for each
province and territory on the procedures for registering mortgages
on title to property and the priority of such registered
mortgages.
There is debate as to the extent of application of the federal
Interest Act, RSC, 1985, c I-15 to today's mortgage industry in
Canada.
By: Leila Burden Nixon (Partner, Toronto)
(b) Consumer credit?
The Bank Act and its regulations and the Trust and Loan
Companies Act and its regulations set out a number of consumer
protection provisions applicable to federally regulated financial
institutions. The legislation sets out requirements relating to
issues such as:
- credit business practices;
- disclosure requirements regarding charges;
- the cost of borrowing and interest;
- notice requirements;
- complaints; and
- the establishment of consumer-focused procedures.
FCAC has oversight of federal consumer protection legislation
applicable to federally regulated financial institutions, including
provisions of the Bank Act, the Trust and Loan Companies Act and
their regulations. Similarly, most provinces and territories have a
provincial body that oversees compliance of consumer protection
matters, as discussed below.
Consumer credit is also regulated by provincial and territorial
consumer protection legislation and their regulations, as
follows:
- British Columbia: the Business Practices and Consumer
Protection Act, SBC 2004, c 2;
- Alberta: the Consumer Protection Act, RSA 2000 c C-26.3; the
Unconscionable Transactions Act, RSA 2000, c U-2; SK: the Consumer
Protection and Business Practices Act, SS 2013, c C-30.2; the Cost
of Credit Disclosure Act, RSS 1978, c C-41; the Unconscionable
Transactions Relief Act, RSS 1978, c U-1;
- Manitoba: the Business Practices Act, CCSM c B120; the Consumer
Protection Act, CCSM C 200; the Unconscionable Transactions Relief
Act, CCSM c U20;
- Ontario: the Consumer Protection Act, 2002, SO 2002, c 30, Sch
A; the Unconscionable Transactions Relief Act, RSO 1990, c U2;
- Quebec: the Consumer Protection Act, CQLR c P-40.1;
- Newfoundland and Labrador: the Consumer Protection and Business
Practices Act, SNL 2009, c C-31.1;
- Nova Scotia: the Consumer Protection Act, RSNS 1989, c 92; the
Unconscionable Transactions Relief Act, RSNS 1989, c 481; the
Consumer Creditors' Conduct Act, RSNS 1989, c 91;
- New Brunswick: the Cost of Credit Disclosure and Payday Loans
Act, SNB 2002, c C-28.3; the Provincial Offences Procedure Act, SNB
1987, c P-22.1; the Unconscionable Transactions Relief Act, RSNB
2011, c 233;
- Prince Edward Island: the Business Practices Act, RSPEI 1988, c
B-7; the Consumer Protection Act, RSPEI 1988, c C-19; the
Unconscionable Transactions Relief Act, RSPEI 1988, c U-2;
- Yukon: the Consumers Protection Act, RSY 2002, c 40;
- Northwest Territories: the Consumer Protection Act, RSNWT 1988,
c C-17; the Cost of Credit Disclosure Act, SNWT 2010, c 23;
and
- Nunavut: Consumer Protection Act, RSNWT (Nu) 1988, c C-17.
This consumer protection legislation must be considered
regardless as to whether the lender is provincially or federally
chartered (for more information on the interaction between federal
and provincial consumer credit legislation, see question 10.1
below). Generally, provincial and territorial Consumer Protection
Acts:
- provide statutory rights to consumer borrowers;
- set out specific requirements regarding the content (ie,
default terms) and performance of consumer credit contracts;
and
- provide detailed obligations regarding proper disclosure of the
cost of consumer credit.
There are a number of notable differences between provinces with
regard to the requirements of consumer protection legislation as it
applies to consumer credit lenders. For example, certain provinces
(ie, Saskatchewan, New Brunswick, Nova Scotia and Prince Edward
Island) require lenders governed by provincial legislation to
obtain 'lending' licences. Furthermore, the legislation in
Alberta, British Columba and Saskatchewan includes additional
requirements and restrictions for 'high-cost credit', and
sets the maximum amount of 'interest' that can be charged
to consumers in those provinces.
In addition, all loans in Canada are governed by the cost of
credit provisions contained under the Criminal Code, RSC, 1985, c
C-46, and are subject to the provisions of the Interest Act, RSC,
1985, c I-15.
Finally, provincial legislation contains additional, specific
statutory requirements for certain consumer credit products, such
as pay-day loans and motor vehicle loans. These provisions either
are found under free-standing legislation or form part of various
consumer protection statutes.
Although provincial laws dealing with consumer credit are
substantially similar across provinces and territories, the
specific language of each applicable act should be consulted for
the particular requirements in each province.
By: Neil S. Abbott (Partner, Toronto) and Leila Burden Nixon (Partner, Toronto)
(c) Investment services?
Many different types of investment vehicles are offered and
available in Canada, including annuities, treasury bills,
guaranteed income certificates, exchange-traded funds, mutual
funds, segregated funds, securities and stocks.
Financial institutions such as banks, credit unions, caisses
populaires and trust companies can offer registered and
unregistered accounts, and other deposit or saving-type products
for investment purposes.
Federally regulated financial institutions are governed by
federal legislation such as the Bank Act and its regulations, and
the Trust and Loan Companies Act and its regulations. Provincially
regulated entities, such as credit unions, are governed by
provincial legislation applicable in their incorporating
jurisdiction. All registered accounts must comply with the federal
Income Tax Act, RSC 1985, c 1 (5th Supp).
Investments in other investment vehicles - such as stocks, bonds
or gold - can be made through brokers or with brokerage firms.
These entities are regulated by the following provincial securities
laws:
- British Columbia: the Securities Act, RSBC 1996, c 418;
- Alberta: the Securities Act, RSA 2000, c S-4;
- Saskatchewan: the Securities Act, 1988, SS 1988-89, c
S-42.2;
- Manitoba: the Securities Act, RSM 1988, c S50, CCSM, c
S50;
- Ontario: the Securities Act, RSO 1990, c S.5;
- Quebec: the Securities Act, CQLR, c V-1.1;
- Newfoundland and Labrador: the Securities Act, RSN 1990, c
S-13;
- Nova Scotia: the Securities Act, RSNS 1989, c 418;
- New Brunswick: the Securities Act, SNB 2004, c S-5.5;
- Prince Edward Island: the Securities Act, SPEI 2007, c 17;
- Yukon: the Securities Act, SY 2007, c 16;
- Northwest Territories: the Securities Act, SNWT 2008, c 10;
and
- Nunavut: the Securities Act, SNu 2008, c 12
The provincial securities regulatory authorities, which
administer the securities laws applicable in their province are as
follows:
- British Columbia: the British Columbia Securities
Commission;
- Alberta: the Alberta Securities Commission;
- Saskatchewan: the Financial and Consumer Affairs,
Saskatchewan;
- Manitoba: the Manitoba Securities Commission;
- Ontario: the Ontario Securities Commission;
- Quebec: the Autorité des marchés financiers
du Québec;
- Newfoundland and Labrador: the Securities Commission of
Newfoundland and Labrador;
- Nova Scotia: the Nova Scotia Securities Commission;
- New Brunswick: the Financial and Consumer Services Commission
of New Brunswick;
- Prince Edward Island: the Office of the Superintendent of
Securities of Prince Edward Island;
- Yukon: the Office of the Yukon Superintendent of
Securities;
- Northwest Territories: the Office of the Superintendent of
Securities Government of Northwest Territories; and
- Nunavut: the Office of the Superintendent of Securities for
Nunavut.
These entities make up the Canadian Securities Administrators
(CSA). The CSA's objective is to improve, coordinate and
harmonise the regulation of Canadian capital markets. The CSA
enacts national instruments and national policies, and is
responsible for developing the 'passport' system.
Furthermore, self-regulatory organizations such as the
Investment Industry Regulatory Organization of Canada and the
Mutual Funds Dealers Association of Canada, as well as the stock
exchanges in Canada, also serve a regulatory function. Banks often
team up with provincial brokerages (which operate nationally) in
order to offer a wider selection of products to clients under the
bank umbrella.
By: Leila Burden Nixon (Partner, Toronto)
(d) Payment services and e-money?
Payments Canada (formerly the Canadian Payments Association) was
created under the Canadian Payments Act, RSC, 1985, c C-21 to:
- establish and operate national systems for the clearing and
settlement of payments among member financial institutions;
- facilitate the interaction of its clearing and settlement
systems with other systems;
- and facilitate the development of new payment
technologies.
Membership of Payments Canada is mandatory for most financial
institutions.
Payments Canada owns and is responsible for operating the two
national payment systems in Canada:
- the Automated Clearing Settlement System (ACSS); and
- the Large Value Transfer System (LVTS).
Payments Canada sets bylaws and rules and has created payment
system procedures for both the ACSS and LVTS. These rules and
procedures govern the daily operations of participants in the
national clearing and settlement system. Under the Canadian
Payments Act, the minister of finance has authority to review or
amend such payment rules, and issue directives to make, amend or
repeal bylaws, rules or standards.
Payment Canada's LVTS and ACSS are overseen by the Bank of
Canada by virtue of the Payment Clearing and Settlement Act, SC
1996, c 6, Sch. The act assigns the Bank of Canada with
responsibility for overseeing automated clearing and settlement
systems for the purpose of controlling systemic risk or payments
systemic risk.
In addition, the Bills of Exchange Act provides the statutory
framework governing cheques, promissory notes and other bills of
exchange.
Finally, the Bank Act and other federal financial institution
statutes contain a number of payments-related provisions.
By: Neil S. Abbott (Partner, Toronto)