First

Session, 46th General Assembly

Elizabeth II, 2008

BILL 4

AN ACT RESPECTING THE COST OF CONSUMER

CREDIT DISCLOSURE

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

KEVIN O'BRIEN

Minister

of Government Services

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTE

The purpose of this Bill is as

described in the

long title.

A BILL

AN ACT RESPECTING THE COST OF CONSUMER CREDIT

DISCLOSURE

Analysis

Short title

Interpretation

PART

APPLICATION

Application

Delivery of disclosure statements

Disclosure

Delivery

PART

RIGHTS AND OBLIGATIONS

Insurer

Cancellation of optional services

Prepayment of credit

Default charges

Invitation to defer payment and

acceleration clause

Non-business credit grantors

Business credit grantors

PART

III

FIXED CREDIT

Application

Advertising

Advertising interest-free periods

Disclosure statements

Interest change disclosure

Increases in outstanding principal

Amendments

Mortgage renewal disclosure

PART

OPEN CREDIT

Application

Advertising

Interest free periods

Open credit disclosure

Statements of account

Transaction description

Credit card by application

Application for credit card

Additional credit card disclosure

Limitation of liability

PART

LEASES OF GOODS

Application

Advertising requirements

Disclosure

Maximum liability for residual

obligation lease

PART

COMPLIANCE

Interpretation

Recovery of overpayments and

compensation

Remedies

Assignee

PART

VII

REGULATIONS

Regulations

Fees and forms

PART

VIII

ENFORCEMENT

Offence

Act may not be waived

Limitation

Act to prevail

PART

TRANSITIONAL, CONSEQUENTIAL AMENDMENTS, REPEAL AND COMMENCEMENT

Transitional

RSNL1990 cC-32 Amdt.

RSNL1990 cD-24 Amdt.

RSNL1990 cM-18 and CNLR 1006/96 Amdt.

RSNL1990 cC-31 Rep.

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

Short title

1. This

Act may be cited as the Cost of Consumer

Credit Disclosure Act.

Interpretation

(1) In

this Act

(a) "advance" and "advanced"

means value received in accordance with subsection (2);

(b) " APR " means the

annual percentage rate calculated in accordance with the regulations;

(c) "associate", where used to indicate

a relationship with a person means

(

i) a corporation of which that person

beneficially owns or controls, directly or indirectly, shares or other securities

currently convertible into shares, that carry more than 10% of the voting rights

(

A) under all circumstances,

(

B) because of the occurrence of an event that has

occurred and is continuing, or

(

C) because of a currently exercisable option or

right to purchase those shares or those convertible securities,

(ii) a partner of that person acting on behalf of

the partnership of which they are partners,

(iii) a trust or estate in which that person has a

substantial beneficial interest or in respect of which he or she serves as

trustee or in a similar capacity,

(iv) a spouse or child of that person, or

(

v) a relative of that person or of his or her

spouse where that relative has the same residence as that person;

(d) "assumed residual payment" means

(

i) for a lease that is neither an option lease

nor a residual obligation lease, the estimated residual value,

(ii) for an option lease, the lesser of the

estimated residual value and the option price, assuming the option is exercised

at the end of the lease term, and

(iii) for a residual obligation lease, the estimated

residual cash payment plus the estimated residual value;

(e) "borrower" means an individual who

has entered into or who is negotiating to enter into a credit agreement if that

individual, under that agreement, receives or is to receive credit from another

party to the agreement, and

(

i) does not include a guarantor, and

(ii) in Parts I and VI includes a lessee;

(f) "brokerage fee" means an amount that

a mortgagor or other borrower pays or agrees to pay to a mortgagee or loan

broker as consideration for services in arranging, negotiating or facilitating

the granting of credit to the mortgagor or borrower and includes an amount that

(

i) deducted from the amount of credit that is

extended to the mortgagor or borrower under the credit agreement, and

(ii) paid to the mortgagee or loan broker by the

credit grantor;

(g) "business day", with respect to a

credit grantor, means a day on which the credit grantor is open for business;

(h) "capitalized amount" means the cash

value of the leased goods plus the amount of other advances made to the lessee

at or before the beginning of the term, minus the total amount of all payments

made by the lessee at or before the beginning of the term;

(i) "cardholder" means an individual who

is a borrower with respect to a credit card;

(j) "cash customer" means a person who

buys a product and who provides full payment for the product at or before the

time of its receipt;

(k) "cash price", with respect to a

product, means

(

i) for a sale to a borrower by a credit grantor

or by an associate of a credit grantor who sells the product to cash customers

in the ordinary course of business an amount that fairly represents the price

for which the seller sells that product to cash customers, or, if the seller

and the borrower agree on a lower price, that lower price,

(ii) for a sale to which subparagraph (

i) does not

apply, the price agreed upon by the parties, or

(iii) for an advertisement by a credit grantor or an

associate of the credit grantor, the price at which the product is currently

offered to cash customers or, if the credit grantor or the associate of the

credit grantor does not currently offer the product to cash customers, the

price stated in the advertisement, and

for the purpose of determining the amount

advanced under a credit agreement, includes discounts, taxes and other charges

payable by a cash customer;

(l) "cash value" of leased goods means

(

i) for a lease by a lessor who, in the ordinary

course of business sells the product to cash customers, the price for which the

lessor sells the product to cash customers, unless the parties have agreed to a

lower price,

(ii) for a lease by a lessor to whom paragraph (

a) does not apply, a reasonable estimate of the cash value of the goods, and

(iii) for an advertisement, the price for which the

advertiser currently offers to sell the product to cash customers or, if the

advertiser does not currently offer the product to cash customers, the price

stated in the advertisement;

(m) "credit agreement" includes an

agreement under which credit is extended that is

(

i) an agreement with respect to a loan of money,

a credit sale, a line of credit or a credit card,

(ii) a lease to which Parts I and VI apply, and

(iii) a renewal of an agreement referred to in

subparagraph (

i) or (ii);

(n) "credit card" means a card or other

device that can be used to obtain advances under a credit agreement for open

credit;

(o) "credit card issuer" means a person

who is a credit grantor with respect to a credit card;

(p) "credit grantor" means

(

i) a person who entered into or is negotiating to

enter into a credit agreement if that person, under that agreement, extends or

is to extend credit to another party to the agreement,

(ii) if the rights of the person referred to in

subparagraph (

i) under the credit agreement are assigned to an assignee, that

assignee, upon notice being given to the borrower,

(iii) a credit card issuer,

(iv) a mortgage broker and a loan broker, and

(

v) a lessor to whom Parts I and VI apply;

(q) "credit sale" means a sale of a

product in which the purchase is financed by the seller or manufacturer of the

product or by an associate of the seller or manufacturer;

(r) "default charge" means a charge

imposed on a borrower who fails to make a payment as it becomes due under a

credit agreement or who fails to comply with another obligation under a credit

agreement, but does not include interest on an overdue payment;

(s) "disbursement charge" means an

expense that is incurred by a credit grantor for the purpose of arranging,

documenting, insuring or securing a credit agreement and charged by the credit

grantor to the borrower that is

(

i) a fee paid to register a document or

information in, or to obtain a document or information from a public registry

of an interest in real or personal property,

(ii) the cost of professional services required for

the purpose of confirming the value, condition, location or conformity to law

of property that serves as security for a credit agreement if the borrower is

given a report signed by the person providing the professional services and is

free to give the report to third persons,

(iii) for a high ratio mortgage as defined by

regulation, a premium for insurance that protects the credit grantor against

the risk of borrower default and a fee for tax account maintenance, and

(iv) an expense designated by regulation as a

disbursement charge;

(t) "estimated residual cash payment"

means the amount that a lessee will be required to pay to a lessor at the end

of the term of a residual obligation lease if the realizable value of the

leased goods at the end of the term equals their estimated residual value;

(u) "estimated residual value" means the

reasonable estimate, made by the lessor at the time the lease agreement was entered

into, of the wholesale value of the leased goods at the end of the term;

(v) "fixed credit" means credit under a

credit agreement that is not for open credit;

(w) "floating rate" means an interest

rate that bears a specified mathematical relationship to an index rate that is

an interest rate

(

i) subject to a minimum or a maximum rate, or

(ii) determined at the beginning of a period and

applies throughout the period regardless of changes in the index rate during

the period;

(x) "grace period" means a period in

which interest accrues but will be forgiven if the borrower satisfies

conditions specified in the credit agreement;

(y) "implicit finance charge" for a

lease means the total of the periodic payments plus the assumed residual

payments and less the capitalized amount;

(z) "index rate" means, with respect to

a credit agreement, the rate that meets the criteria prescribed by regulation;

(aa) "individual" means a natural person;

(bb) "initial disclosure statement" means

with respect to a credit agreement or a lease, the disclosure statement that is

required under

section 4 for that credit

agreement or lease;

(cc) "interest" means charges that accrue

over time and are determined by applying a rate to an amount that is owing from

time to time under a credit agreement;

(dd) "interest-free period" means a

period following the making of an advance during which interest does not accrue

on the advance;

(ee) "lease" means an agreement for the

hire of goods, except an agreement for the hire of goods with respect to a

residential tenancy agreement;

(ff) "lessee" means an individual who

entered into or who is negotiating to enter into a lease if that individual,

under that lease, hires or is to hire goods from another party to the

agreement;

(gg) "lessor" means a person who entered

into or who is negotiating to enter into a lease if that person, under that

lease, leases or is to lease goods to another party to the agreement;

(hh) "loan broker" means a person who,

for compensation, arranges, negotiates or facilitates an extension of credit;

(ii) "minister" means the minister

appointed under the Executive Council Act

to administer this Act;

(jj) "mortgage broker" means a person

who, for compensation, arranges, negotiates or facilitates an extension of a

mortgage loan;

(kk) "mortgage loan" means a loan of

money secured by an interest in real property;

(ll) "non-interest finance charge" means

a charge that a borrower is required to pay with respect to a credit agreement,

other than

(

i) interest,

(ii) a prepayment charge,

(iii) a default charge,

(iv) a charge for an optional service,

(

v) a charge for a service referred to in

paragraph (2)(f), (

g) or (h), or

(vi) with respect to a credit sale, a charge that

would also be payable by a cash customer;

(mm) "open credit" means credit under a

credit agreement if the credit agreement

(

i) anticipates multiple advances that are to be

made when requested by the borrower in accordance with the agreement, and

(ii) does not establish the total amount to be

advanced to the borrower under the agreement although it may impose a credit

limit;

(nn) "option lease" means a lease that

gives the lessee the right to acquire title to or retain permanent possession

of the leased goods by making a payment in addition to the payments required

under the lease or by satisfying other specified conditions;

(oo) "option price" means the amount of

the additional payment that the lessee shall make in order to exercise the

option under an option lease;

(pp) "outstanding balance" means the

total amount owing at any particular time under a credit agreement;

(qq) "payment" means value given by a

borrower within the meaning of subsection (2);

(rr) "payment period" means one of the

intervals into which the term of a credit agreement or a lease is divided for

the purpose of determining the amount of and timing of payments;

(ss) "periodic payment" means a payment

that, under a credit agreement or a lease, is to be made with respect to each

payment period established under that agreement or lease;

( tt ) "residual

obligation lease" means a lease under which the lessee may be required at

the end of the lease term to pay the lessor an amount based wholly or partly on

the difference between the estimated residual value and the realizable value of

the leased goods;

(uu) "scheduled payments credit

agreement" means a credit agreement for fixed credit under which the

amount advanced is to be repaid in accordance with a specified

schedule of

payments and that

schedule may be subject to adjustment to accommodate

contingencies including changes in the interest rate;

(vv) "security interest" means an

interest in property that secures the borrower's obligations under a credit

agreement;

(ww) "spouse" means either of a man and

woman who

(

i) are married to each other,

(ii) are married to each other by a marriage that

is voidable and has not been voided by a judgment of nullity, or

(iii) have gone through a form of marriage with each

other, in good faith, that is void and are cohabiting or have cohabited within

the preceding year;

(xx) "term", with respect to a lease,

unless the context indicates otherwise, means the period during which the

lessee is entitled to retain possession of the leased goods;

(yy) "total lease cost" means the total

of non-refundable payments that the lessee will be required to make in the

ordinary course of events; and

(zz) "total cost of credit" means the

difference between the value given or to be given within the meaning of

subsection (4) by the borrower with respect to a credit agreement and the value

received or to be received, within the meaning of subsection (2) by the

borrower with respect to the credit agreement, disregarding the possibility of

prepayment or default.

(2) The following constitute value received or to

be received by a borrower with respect to a credit agreement:

(

a) money transferred or to be transferred by the

credit grantor to the borrower or to the order of the borrower under the credit

agreement;

(

b) the cash price of a product purchased or to be

purchased under the credit agreement;

(

c) the amount of a pre-existing monetary

obligation of the borrower that is paid, discharged or consolidated by the

credit grantor under the credit agreement;

(

d) the cash value of goods under a lease;

(

e) the amount of money obtained or to be obtained

or the cash price of a product obtained or to be obtained through the use of a

credit card obtained under the credit agreement;

(

f) a following expense if the credit grantor

incurred or is to incur the expense for the purpose of arranging, documenting,

insuring or securing the credit agreement:

(

i) fees to a third party to record or register a

document or information in, or to obtain a document or information from, a

public registry of interest in real or personal property,

(ii) fees for professional services required for

the purpose of confirming the value, condition, conformity to law or location

of property that serves as security for a credit agreement, if the borrower is

given a report signed by the person providing the professional services and is

free to give the report to other persons,

(iii) premiums for

(

A) insurance that protects the credit grantor

against default on a high-ratio mortgage,

(

B) casualty insurance on the subject matter of a

security interest if the borrower is a beneficiary of the insurance and the

insured amount is the full insurable value of the subject matter, and

(

C) insurance provided or paid for by the credit

grantor with respect to a credit agreement if the insurance is optional, and

(iv) an application fee for insurance referred to

in clause (iii)(A)

(

g) service provided or to be provided by the

credit grantor to maintain a tax account on a high-ratio mortgage, expressed in

the amount of a reasonable fee for that service, whether the tax account is

required with respect to the credit agreement or is requested by the borrower;

and

(

h) anything designated

under the regulations as value received by the borrower for the purpose of this

subsection.

(3) Notwithstanding subsection (2), the following

do not constitute value received or to be received by a borrower with respect

to a credit agreement unless they relate to an optional service, expense, service

or thing under paragraph (2)(

f) or (g):

(

a) money paid or to be paid, an expense incurred

or to be incurred or anything done or to be done by the credit grantor for the

purpose of arranging, documenting, securing, administering or renewing the

credit agreement;

(

b) insurance provided or paid for or to be

provided or paid for by the credit grantor with respect to the credit

agreement; and

(

c) another thing that may be prescribed by

regulation for the purpose of this subsection.

(4) The following constitutes value given or to be

given by a borrower with respect to a credit agreement:

(

a) money transferred or

to be transferred from the borrower to the credit grantor with respect to the

credit agreement;

(

b) money transferred or to be transferred from

the borrower to a person other than the credit grantor with respect to a charge

for services that the credit grantor requires the borrower to obtain or pay for

with respect to the credit agreement, unless the charge

(

i) is for an expense to which paragraph (2)(

f) or

(

h) would have applied if the expense had been incurred initially by the credit

grantor and then charged directly to the borrower,

(ii) is for services provided by a lawyer chosen by

the borrower, or

(iii) is for charges for shares in a credit union

that a borrower shall buy as a condition of entering into a credit agreement

with the credit union; and

(

c) another thing that may be prescribed by

regulation for the purpose of this subsection.

PART I

APPLICATION

Application

(1) This

Act applies to a

(

a) credit agreement where

(

i) the borrower is an

individual who enters into a credit agreement for primarily personal, family or

household purpose; and

(ii) either

(

A) the credit grantor enters into the agreement

in the ordinary course of business, or

(

B) the credit agreement is arranged by a loan

broker; and

(

b) borrower, credit agreement, credit grantor or

loan broker or a class of borrowers, credit agreements, credit grantors or loan

brokers prescribed in the regulations.

(2) For the purpose of subparagraph (1)(a)(i), a

credit grantor is entitled to rely on a statement in a credit agreement or

other document regarding the purpose for which a borrower enters into a credit

agreement, if the statement is signed by the borrower and the credit grantor

believes in good faith that the statement is true.

(3) Notwithstanding subsection (1), this Act does

not apply to

(

a) a credit sale where all of the following occur:

(

i) the credit sale anticipates a single payment

in the full amount for the product within a certain period after a written

invoice or statement of account is delivered to the buyer,

(ii) the credit sale is unconditionally interest-free

during the payment period referred to in subparagraph (i),

(iii) the credit sale is unsecured, apart from a

lien on the product that may arise by operation of law,

(iv) the credit sale is not assigned in the

ordinary course of the credit grantor's business otherwise than as security,

and

(

v) the credit sale does not provide for non-interest

finance charges; or

(

b) a borrower, credit agreement, credit grantor

or loan broker, or a class of borrowers, credit agreements, credit grantors or

loan brokers, exempted under the regulations.

Delivery of disclosure

statements

(1) A

credit grantor who has entered into or is negotiating to enter into a credit

agreement with an individual who is the borrower under that agreement shall

deliver to the borrower a disclosure statement with respect to that credit

agreement before the earlier of the date on which the borrower

(

a) enters into the credit agreement; or

(

b) makes a payment in connection with the credit

agreement.

(2) Notwithstanding subsection (1), a credit

grantor who has entered into or who is negotiating to enter into a credit

agreement to provide a mortgage loan to an individual who is the borrower under

that agreement shall deliver a disclosure statement with respect to that credit

agreement to the borrower in accordance with the regulations.

Disclosure

(1) A

credit grantor who is required to provide a disclosure statement or a statement

of account under this Act shall ensure that the statement

(

a) is in writing or

another form that is consented to, in writing by the borrower, and the credit

grantor shall retain that statement and consent as a record for future use;

(

b) contains the

information required under this Act; and

(

c) expresses that

information clearly, concisely, in a logical order and in a manner that is

likely to bring the information to the borrower's attention.

(2) A disclosure statement or a statement of

account may be a separate document or part of another document provided to the

borrower.

(3) Information disclosed under this Act whether

in a disclosure statement, advertisement or otherwise may be based on an

estimate or assumption if the

(

a) disclosure depends on information that is not

ascertainable by the credit grantor at the time of the disclosure; and

(

b) estimate or assumption is reasonable and is

clearly identified in the document effecting the disclosure as an estimate or assumption.

(4) Where an advertisement is published and

information is disclosed in that advertisement that, under this Act, requires

other information to be included in that advertisement, the credit grantor who

publishes or on whose behalf the advertisement is published shall disclose the

information in the manner required by regulation.

(5) Where information in a disclosure statement is

inconsistent with information or a provision set out in the credit agreement,

the credit agreement is presumed to incorporate the information or provision

that is more favourable to the borrower, unless it is proven that the less

favourable information or provision reflects the borrower's actual

understanding of the provisions of the agreement.

Delivery

(1) Where

there is more than one borrower under a credit agreement, a disclosure

statement or other document that is required to be delivered to the borrowers

may be delivered to one of the borrowers, and it is unnecessary to deliver a

separate copy to each borrower.

(2) A document sent by ordinary mail to a borrower

at the mailing address provided by the borrower to the credit grantor shall be

considered, in the absence of evidence to the contrary, to have been delivered

to the borrower 7 days after it was sent.

PART II

RIGHTS AND OBLIGATIONS

Insurer

(1) A

borrower who is required by a credit grantor to purchase insurance may purchase

it from an insurer authorized to provide that type of insurance in the province

but the credit grantor may, on reasonable grounds, reserve the right to

disapprove an insurer selected by the borrower.

(2) A credit grantor who offers to provide or to

arrange insurance referred to in subsection (1) shall, at the time of that

offer, clearly disclose to the borrower in writing that the borrower may, in

accordance with subsection (1), purchase the required insurance through an

insurance agent and insurer of the borrower's choice.

Cancellation of

optional services

(1) A

borrower may cancel an optional service of a continuing nature that is provided

by the credit grantor or an associate of the credit grantor by giving 30 or

more days notice or a shorter period of notice where that shorter notice is

provided for by the agreement under which the service is provided.

(2) A borrower who cancels an optional service

under subsection (1) is

(

a) not liable for charges relating to a portion

of the service that has not been provided at the time of the effective date of

the cancellation; and

(

b) entitled to a refund of an amount already paid

for those charges.

Prepayment of

credit

(1) This

section does not apply to mortgage loans.

(2) A borrower is entitled to prepay the full

outstanding balance owing under a credit agreement at any time without a

prepayment charge or penalty.

(3) Where a prepayment under subsection (2) is

made with respect to a credit agreement for fixed credit, the credit grantor

shall refund or credit to the borrower the portion of non interest charges paid

by the borrower or added to the outstanding balance as prescribed by

regulation.

(4) A borrower is entitled, on a scheduled payment

date or at least monthly, to prepay less than the full outstanding balance

owing under a credit agreement for fixed credit, without a prepayment charge or

penalty, but, in that event, is not entitled to a refund or credit of non-interest

finance charges.

Default charges

10. A

credit agreement shall not impose default charges other than reasonable charges

(

a) with respect to legal costs incurred in

collecting or attempting to collect payment;

(

b) with respect to costs, including legal costs,

incurred in realising a security interest or protecting the subject matter of a

security interest after default; and

(

c) that reflect costs incurred by the credit

grantor because a cheque or other payment instrument given by the borrower to

the credit grantor was dishonoured.

Invitation to

defer payment and acceleration clause

(1) Where

a credit grantor invites a borrower to defer making a payment that would

otherwise be due under a credit agreement, the credit grantor shall, in that

invitation, clearly disclose whether or not interest will accrue on the unpaid

amount during the period for which the payment is deferred.

(2) Where an invitation referred to in subsection

(1) does not disclose whether or not interest will accrue on the unpaid amount

during the period for which payment is deferred, the credit grantor shall be

considered to have waived the interest that would otherwise accrue during that

period.

(3) Notwithstanding anything in a credit

agreement, the whole or part of the outstanding balance does not become payable

or otherwise accelerated, and an interest rate made specially applicable to the

outstanding balance does not become effective in accordance with the

acceleration clause, until written notice of the default or other event

(

a) is served personally on the borrower; or

(

b) is sent by registered mail to the borrower at

the borrower's latest address as shown on the records of the credit grantor.

(4) Notwithstanding subsection (3), if the credit

grantor sends a notice under paragraph (3)(b), the whole or part of the

outstanding balance does not become payable or otherwise accelerated, and an

interest rate made specially applicable to the outstanding balance does not become

effective until 10 days after the date the notice was sent to the borrower.

(5) In this section, "acceleration

clause" means a clause in a credit agreement that provides that on default

by the borrower or on the occurrence of another event, and whether or not at

the option of the credit grantor, the whole or a part of the outstanding

balance becomes immediately payable or is otherwise accelerated.

Non-business

credit grantors

12. Where

a loan broker secures for a borrower an extension of credit from a credit

grantor who does not provide credit in the ordinary course of carrying on

business

(

a) the provisions of this Act and the regulations

that impose a duty on a credit grantor shall be read as imposing that duty on

the loan broker rather than on the credit grantor; and

(

b) where the borrower pays or is required to pay

a brokerage fee, the loan broker shall ensure that the initial disclosure statement

for the credit agreement

(

i) discloses the amount of the brokerage fee, and

(ii) accounts for the brokerage fee in the APR and the total cost of

credit.

Business credit

grantors

(1) Where

a loan broker secures for a borrower an extension of credit from a credit

grantor who does provide credit in the ordinary course of carrying on business,

(

a) if the credit grantor deducts a brokerage fee

from the value received or to be received by the borrower in accordance with

subsections 2 (2) and (3), the credit grantor

shall ensure that the initial disclosure statement for the credit agreement

(

i) discloses the amount of the brokerage fee, and

(ii) accounts for the brokerage fee in the APR and the total cost of

credit; and

(

b) if the loan broker takes a loan application

from the borrower and forwards it to the credit grantor, the loan broker shall

give to the borrower

(

i) a disclosure statement containing the

information referred to in paragraph (a), and

(ii) other information that, under this Act, is

required to be disclosed in the initial disclosure statement for the credit

agreement.

(2) Where a loan broker gives a borrower a

disclosure statement under paragraph (1)(b), the credit grantor may

(

a) adopt that disclosure statement as its own, in

which case the credit grantor is jointly and individually liable with the loan

broker for the content of that statement; or

(

b) elect to deliver to the borrower a separate

disclosure statement containing the information that is required to be disclosed

under this Act.

PART III

FIXED CREDIT

Application

(1) This

Part applies only to credit agreements that extend fixed credit.

(2) Where this Part applies to a credit sale, the

credit grantor shall ensure that the credit agreement is a scheduled payments

credit agreement.

Advertising

(1) This

section applies only to advertisements that

(

a) offer credit to which this Part applies; and

(

b) state the interest rate or amount of a

payment.

(2) A credit grantor shall ensure that every

advertisement to which this

section applies that is published by or on behalf

of the credit grantor discloses the APR and the term with respect to the proposed credit agreement.

(3) A credit grantor to which subsection

(2) applies shall ensure that if the advertisement is for a credit sale of a

specifically identified product,

(

a) the advertisement discloses the cash price of

that product; or

(

b) in connection with which a non-interest

finance charge is to be payable, the advertisement discloses the

(

i) cash price of the product, and

(ii) total cost of credit.

Advertising interest-free

periods

(1) An

advertisement that states or implies that no interest is payable for a certain

period with respect to a transaction shall disclose whether

(

a) the transaction is unconditionally interest-free

during the period; or

(

b) interest accrues during the period but will be

forgiven under certain conditions.

(2) Where interest accrues during a period but

will be forgiven under certain conditions, the advertisement shall also

disclose

(

a) those conditions; and

(

b) the APR that will apply to the period if those conditions are not met.

(3) An advertisement to which subsection

(1) applies that does not disclose the information required under paragraph (1)(

b) and

subsection (2) shall be considered to represent that the transaction is unconditionally

interest-free during the relevant period.

Disclosure statements

(1) A

credit grantor who has entered into or who is negotiating to enter into a

scheduled payments credit agreement shall ensure that the disclosure statements

for that credit agreement disclose the information required by regulation.

(2) A credit grantor who has entered into or is

negotiating to enter into a credit agreement that is not a scheduled payment

credit agreement shall ensure that the disclosure statements for that credit

agreement disclose the information required by regulation.

Interest change

disclosure

(1) In

addition to the disclosure statement required under

section 17 , where the interest rate is a floating rate, the

credit grantor shall, at least once every 12 months, deliver to the borrower a

disclosure statement that contains the information required by regulation.

(2) In addition to the disclosure statement

required under

section 17 , where the interest

rate is not a floating rate but is subject to change, the credit grantor shall,

within 30 days after the date on which the annual interest rate becomes one

percent or more higher than the rate most recently disclosed to the borrower in

writing, deliver to the borrower a disclosure statement that contains the

following information:

(

a) the date of the statement;

(

b) the new annual interest rate and the date that

the new annual interest rate takes effect; and

(

c) the new amount, and timing, of payments to be

made after the date referred to in paragraph (b).

Increases in outstanding

principal

(1) In

addition to another document that the credit grantor is required to deliver to

the borrower, the credit grantor shall deliver to the borrower a notice, in

writing, in accordance with subsection (2) where,

(

a) the outstanding principal on a scheduled

payments credit agreement increases, as a result of

(

i) the compounding of interest on a missed or

late payment, or

(ii) the imposition of a default charge; and

(

b) as a result of the increases in outstanding

principal, the total amount of the payments the borrower is scheduled to make

over a payment period does not cover the interest that will accrue during that

payment period.

(2) A notice under subsection (1) shall

(

a) be delivered to the borrower not more than 30

days after the most recently missed or late payment or default payment imposed;

and

(

b) specify

(

i) that the outstanding principal has increased

and why,

(ii) that, because of the increase in principal,

the subsequent scheduled payments will not cover the interest that will accrue

in each payment period, and

(iii) what the total outstanding balance will be at

the end of the term if the amount of subsequent scheduled payments is not

adjusted.

Amendments

(1) Where

a credit agreement is amended, the credit grantor shall deliver a supplementary

disclosure statement to the borrower not later than 30 days after the amendment

is made.

(2) The credit grantor shall ensure that a

supplementary disclosure statement sets out the changed information but that

statement need not repeat information that is unchanged since the previous

disclosure statement.

(3) This

section does not apply to changes

effected by a renewal to which

section 21

applies.

Mortgage renewal

disclosure

(1) Where the amortization period for a mortgage loan under a

scheduled payment credit agreement is longer than the term of the mortgage, the

credit grantor shall notify the borrower, in writing, not fewer than 21 days

before the end of the term, whether or not the credit grantor is willing to

renew the mortgage for a further term.

(2) A credit grantor who is willing to renew a

mortgage shall include, with the notice referred to in subsection (1), a disclosure

statement, based upon the assumption that the borrower will make payments that

are due under the current mortgage that includes the information required by

regulation.

(3) Where a credit grantor fails to provide the

borrower with a renewal statement for a mortgage loan 21 or more days before

the effective date of the renewal agreement, the borrower's rights under the

original loan agreement continue to apply until 21 days after the renewal

statement is provided to the borrower.

(4) Subsection (3) does not apply where

(

a) a credit grantor delivers to a borrower a

disclosure statement with respect to the renewed mortgage not fewer than 21

days before the effective date of the renewed mortgage; and

(

b) that statement does not reflect the terms of

the renewed mortgage by reason only that the

(

i) outstanding balance of the mortgage loan on

the effective date of the renewed mortgage differs from that stated in the

disclosure statement because one of one or more missed, late, early or extra

payments,

(ii) interest rate under the renewed mortgage is

lower than the interest rate stated in the disclosure statement, or

(iii) amortization period

or frequency of payments under the renewed mortgage differs from what was

stated in the disclosure statement.

(5) Where subsection (4) applies, the credit

grantor shall, not more than 30 days after the effective date of the renewed

mortgage, deliver to the borrower a revised disclosure statement that reflects

the terms of the renewed mortgage.

PART IV

OPEN CREDIT

Application

22. This

Part applies to credit agreements that extend open credit.

Advertising

23. A

credit grantor including a credit grantor associated with a credit card shall

ensure that an advertisement that is published by or on behalf of the credit grantor

shall disclose

(

a) the current annual interest rate; and

(

b) initial or periodic non interest finance

charges.

Interest free

periods

(1) An

advertisement that states or implies that no interest is payable for a certain

period with respect to a transaction under a credit agreement shall disclose

whether

(

a) the transaction is unconditionally interest

free during the period; or

(

b) interest accrues during the period but will be

forgiven under certain conditions.

(2) Where interest accrues during the period but

will be forgiven under certain conditions, the advertisement shall also

disclose

(

a) those conditions; and

(

b) the annual interest rate for the period,

assuming those conditions are not met.

(3) An advertisement to which subsection

(1) applies that does not disclose the information required under paragraph (1)(

b) and subsection (2) shall be considered to represent that the transaction is unconditionally

interest free during the relevant period.

Open credit disclosure

25. A

credit grantor who has entered into or who is negotiating to enter into a

credit agreement shall ensure that the initial disclosure statement for that

credit agreement discloses the information required by regulation.

Statements of

account

(1) A

credit grantor shall, at least monthly, deliver to the borrower a statement of

account containing the

(

a) period covered by the statement and that

period shall run from the date of the first advance or, where a statement has

been delivered under this section, from the date of the statement of account

most recently delivered to the borrower;

(

b) outstanding balance at the beginning of the

statement period;

(

c) posting date, description and amount of each

transaction or charge added to the outstanding balance during the statement

period;

(

d) posting date and amount of each payment or

credit subtracted from the outstanding balance during the statement period;

(

e) annual interest rate or rates in effect during

the statement period or a part of the period;

(

f) total of all amounts added to the outstanding

balance during the statement period;

(

g) total of all amounts subtracted from the

outstanding balance during the statement period;

(

h) outstanding balance at the end of the

statement period;

(

i) credit limit;

(

j) minimum payment;

(

k) due date for payment;

(

l) amount that the borrower shall pay on or

before the due date in order to take advantage of a grace period;

(

m) borrower's rights and obligations regarding

the correction of billing errors; and

(

n) telephone number required under subsection

(3).

(2) Notwithstanding subsection (1), a credit

grantor is not required to send a statement of account to a borrower at the end

of a period during which there has been no advance of payment where

(

a) there is no outstanding balance at the end of

the period; or

(

b) the borrower is in default and the credit

grantor has

(

i) demanded payment of the outstanding balance,

and

(ii) given notice to the borrower that the

borrower's privileges to obtain advances under the agreement have been

cancelled or suspended due to the default.

(3) A credit grantor shall provide a telephone

number that the borrower can use to obtain information about the borrower's

account during the credit grantor's ordinary business hours and without incurring

charges for the call, and the credit grantor shall ensure that that information

is available at that number during those hours.

Transaction

description

27. A

transaction is sufficiently described if the description in the statement of

account, along with a transaction record included with the statement of account

or made available to the borrower at the time of the transaction, can

reasonably be expected to enable the borrower to verify the transaction.

Credit card by

application

(1) A

credit card issuer shall not issue a credit card to an individual who has not

applied for the card.

(2) Subsection (1) does not apply to a credit card

issued to an individual to replace or renew a card that was applied for by and

issued to that individual.

Application for

credit card

(1) A

credit grantor who has entered into or who is negotiating to enter into a

credit agreement for a credit card shall ensure that the application form for

that credit card discloses the information required by regulation.

(2) Notwithstanding subsection (1), instead of

disclosing the information required under that subsection, the application form

may disclose a telephone number that the cardholder can use to obtain that

information during the credit card issuer's ordinary business hours and without

incurring charges for the call, and the credit card issuer shall ensure that

that information is available at that number during those hours.

(3) Notwithstanding subsection (2), where an

individual applies for a credit card in person, by telephone or by electronic

means, the credit card issuer shall disclose the information referred to in

subsection (1) when the individual makes the application.

(4) An individual who applies for a credit card

without signing an application form shall be considered, on using the credit

card for the first time, to have entered into a credit agreement with respect

to that card in the terms of the disclosure statement referred to in subsection

(5).

(5) Nothing in this

section relieves the credit

card issuer from the requirement to deliver a disclosure statement in

accordance with sections 10 and 30 .

Additional credit

card disclosure

(1) In

addition to the disclosure requirements of

section 27 ,

a credit card issuer shall disclose, in the initial disclosure statement for a

credit card, the card holder's maximum liability for unauthorised use of the

credit card if it is lost or stolen.

(2) The credit card issuer shall notify the

cardholder of a change in the information disclosed in a disclosure statement,

(

a) in the case of a change to the following

information, in the next statement of account following the change in information

or in a document that is given to the cardholder with the next statement of

account:

(

i) a change in the credit limit,

(ii) a decrease in the interest rate or the amount

of other charges,

(iii) an increase in the length of an interest free

period or grace period, and

(iv) a change in the floating interest rate; or

(

b) in another case, at least 30 days before the

date that the change takes effect.

Limitation of

liability

(1) A

cardholder who has, orally or in writing, reported a lost or stolen credit

card, or the unauthorised use of the credit card or credit card number, to the

credit card issuer is not liable for a debt incurred through the use of that

card after the credit card issuer receives the report.

(2) The maximum total liability of a cardholder

arising from unauthorised use of a lost or stolen credit card before the issuer

receives notice under subsection (1) is the lesser of

(a) $50; or

(

b) the maximum amount set by the credit agreement

with respect to the credit card.

(3) Subsection (2) does not apply to the use of a

credit card in conjunction with a personal identification number at a device commonly

referred to as an automated teller machine.

PART V

LEASES OF GOODS

Application

32. This

Part applies only to a lease that is

(

a) for a fixed term of 4 months or more;

(

b) for an indefinite term or is renewed

automatically until one of the parties takes positive steps to terminate it; or

(

c) a residual obligation lease.

Advertising requirements

33. A

lessor shall ensure that every advertisement that is published by or on behalf

of the lessor and that gives specific information about the cost of a lease discloses

the following information:

(

a) that the transaction is a lease;

(

b) the term of the lease;

(

c) the nature and amounts of payments that are

payable by the lessee on or before the beginning of the term;

(

d) the amount, timing and number of the periodic

payments;

(

e) the nature and amount of other payments that

are payable by a lessee in the ordinary course of events;

(

f) the lease APR ; and

(

g) where required under this Act or another Act,

information regarding extra charges based on the usage of the leased goods.

Disclosure

(1) A

lessor who has entered into or who is negotiating to enter into a lease shall

ensure that the initial disclosure statement for that lease discloses the

information required by regulation.

(2) The lessor shall deliver the initial

disclosure statement to the lessee before the lessee enters into the lease or

makes a payment with respect to the lease.

Maximum liability

for residual obligation lease

35. Notwithstanding

paragraph 2 (1)(tt), the maximum liability of a

lessee at the end of the term of a residual obligation lease after returning

the leased goods to the lessor is the sum of the following amounts as

calculated in accordance with the regulations:

(

a) the estimated residual cash payment; and

(

b) the estimated residual

value less the realizable value of the leased goods.

PART VI

COMPLIANCE

Interpretation

(1) For

the purpose of this Part, a credit grantor shall be considered to have a

compliance procedure where that credit grantor

(

a) requires its employees and agents to follow

procedures or has implemented automated procedures designed to ensure that

borrowers receive the information to which they are entitled at the time and in

the form required under this Act; and

(

b) monitors the effectiveness of the measures

referred to in paragraph (

a) and promptly remedies deficiencies in their design

or implementation.

Recovery of overpayments

and compensation

(1) Notwithstanding

an agreement to the contrary, where a borrower makes a payment to a credit

grantor that the credit grantor is not entitled to receive, the credit grantor

shall refund the payment to the borrower or, where the parties agree, credit

the payment against the outstanding balance under the credit agreement as of

the time the payment was made.

(2) A credit grantor who contravenes this Act

shall compensate a borrower for a loss the borrower suffers because of the

contravention and the compensation to which the borrower is entitled may be set

off against the outstanding balance of the credit agreement or may be recovered

from the credit grantor in an action in a court.

Remedies

(1) A

contravention of this Act is an excusable error where

(

a) the credit grantor had a compliance procedure

to prevent or identify a contravention when the contravention occurred;

(

b) the contravention was accidental or the result

of an employee's or agent's failure to follow the compliance procedure; and

(

c) on discovering the

contravention, the credit grantor promptly took steps to minimize its effect on

an affected borrower.

(2) Where a credit grantor contravenes this Act in

relation to a credit agreement and the contravention is not an excusable error,

the borrower is entitled, in addition to another remedy to which the borrower

may be entitled, to recover the damages provided for under this

section from

the credit grantor in an action in a court of competent jurisdiction.

(3) The damages for a contravention of this Act

are the lesser of $500 and 5% of whichever of the following is applicable:

(

a) for a credit agreement for fixed credit, the

maximum outstanding balance;

(

b) for a lease, the capitalized

amount; and

(

c) for a credit agreement for open credit,

(

i) with a specified credit limit, the credit

limit, and

(ii) without a specified credit limit, $500.

(4) Where a contravention of this Act relates to a

statement of account for open credit, the damages are equal to the interest and

non interest finance charges for the period covered by the statement of account.

(5) A court may reduce the damages to which a

borrower would otherwise be entitled under this

section if the court is

satisfied, in view of all the circumstances, including an undertaking as to

future compliance that is given by the credit grantor, that it would be

appropriate to do so.

(6) The damages to which a borrower is entitled

may be set off against an amount otherwise payable by the borrower to the

credit grantor.

(7) A remedy under this Act is in addition to and

does not derogate from another legal, equitable or statutory remedy.

(8) A court may award exemplary damages to a

borrower against a person who has deliberately contravened this Act or if the

court considers that the conduct of that person justifies an award of exemplary

damages.

Assignee

(1) Except

as otherwise provided in this section, a borrower may assert against a person

to whom the rights of a credit grantor have been assigned, rights or remedies

under

section 6 , 37

or 38 that the borrower could have asserted

against the original credit grantor.

(2) The assignee's maximum liability under a

section referred to in subsection (1) is limited to the outstanding balance at

the time of the assignment or the proportion of the outstanding balance that is

assigned to the assignee.

(3) An assignee does not incur liability under

this

section for a credit grantor's contravention of this Act unless

(

a) the assignee knew of the contravention before

the borrower received notice of the assignment;

(

b) the contravention consists of the credit

grantor's failure to deliver a disclosure statement to the borrower; or

(

c) the contravention is apparent on the face of

the disclosure statement or is apparent by comparing the disclosure statement

with the written terms of the credit agreement.

(4) An assignee is entitled to rely in good faith

on a borrower's signed acknowledgement of receipt of a disclosure statement.

PART VII

REGULATIONS

Regulations

(1) The

Lieutenant-Governor in Council may make regulations

(

a) defining a word for

the purpose of this Act where that word is not defined in the Act;

(

b) respecting the calculation of

(

i) APR ,

(ii) lease APR ,

(iii) the penalty payable for the early termination

of a lease, and

(iv) another matter that under this Act is to be

determined by calculation;

(

c) respecting the criteria to be used in

determining what constitutes an index rate;

(

d) prescribing credit agreements or classes of

credit agreements to which this Act applies or does not apply;

(

e) respecting the information that shall be

disclosed in a disclosure statement;

(

f) respecting the form and manner in which

information required to be disclosed under this Act is to be disclosed;

(

g) defining for the

purpose of advertisements, what constitutes a representative transaction and

prescribing information that shall be disclosed in an advertisement that refers

to one or more representative transactions;

(

h) respecting high ratio

mortgages and realizable value;

(

i) respecting the manner

in which the estimated residual cash payment and the realizable value of leased

goods is to be calculated;

(

j) respecting the determination that a thing

received or to be received by a borrower as value received or to be received or

as not constituting value received or to be received;

(

k) designating anything given or to be given by a

borrower as value given or to be given;

(

l) prescribing expenses

for the purpose of this Act;

(

m) respecting the time by which a credit grantor shall

under which a time period may be waived;

(

n) prescribing the portion and manner of

refunding and crediting non-interest finance charges;

(

o) prescribing

information respecting extra charges for the purpose of paragraph 33 (g);

(

p) respecting the form, contents and manner in

which information and records may be disclosed or delivered under this Act and,

for a prescribed manner of delivery, prescribing the time on which a record

delivered in that manner is considered to be received by the person to whom it

was delivered;

(

q) requiring credit grantors and loan brokers or

one or more classes of them to retain one or more records required under this

Act for a specified period and prescribing when, how and to whom those records

are to be made available for examination, extracts and copying;

(

r) exempting, generally or in specified

circumstances, certain classes of persons from all or a Part of this Act and

regulations;

(

s) respecting designated expenses;

(

t) prescribing the

application or non application of this Act for the purpose of paragraphs 3 (1)(

b) and 3 (3)(b);

(

u) respecting the waiver or variation of time

periods by agreement or otherwise; and

(

v) generally, to give effect to the purpose of

this Act.

(2) Regulations made under subsection (1) may be

made with retroactive effect

Fees and forms

41. The

minister may set fees payable under this Act and may approve forms for the

purpose of the Act.

PART VIII

ENFORCEMENT

Offence

(1) A

(

a) person who contravenes this Act or the

regulations or an order or direction given under this Act or the regulations;

and

(

b) director or officer of a corporation who

knowingly concurs in a contravention of this Act or the regulations or an order

or direction given under this Act or the regulations

is guilty of an offence and liable on

summary conviction to a fine of not less than $2,000 and in default of payment

of a fine or in addition to a fine, to imprisonment for a period not exceeding

6 months.

(2) Notwithstanding subsection (1), where a

corporation is convicted of an offence under subsection (1), it is liable to a

fine of not more than $25,000.

Act may not be

waived

(1) An

agreement

(

a) that provides that all or a provision of this

Act does not apply;

(

b) that provides that a benefit or remedy under

this Act is not available; or

(

c) that limits, modifies or abrogates or in

effect limits, modifies or abrogates a remedy provided under this Act,

is void.

(2) Subsection (1) applies to an agreement whether

or not the agreement is oral, written, express or implied.

(3) Subsection (1) does not apply to a provision

to waive a time period provided that that waiver is permitted by regulation.

Limitation

44. A

prosecution under this Act or the regulations shall be started within 3 years

from the date on which the offence is alleged to have been committed.

Act to prevail

45. Where

another Act or a regulation made under another Act conflicts with this Act or

the regulations or an order or direction given under this Act or the

regulations, this Act and the regulations and an order or direction given under

this Act or the regulations prevails.

PART IX

TRANSITIONAL, CONSEQUENTIAL AMENDMENTS, REPEAL AND COMMENCEMENT

Transitional

(1) This

Act applies to

(

a) credit agreements for fixed credit and leases

that are entered into, renewed or amended on or after the date of coming into

force of this Act; and

(

b) credit agreements for open credit that are in

existence or that are entered into, renewed or amended on or after the date of

coming into force of this Act.

(2) The Mortgage

Brokers Act applies to credit agreements for fixed credit and leases

entered into before the coming into force of this Act.

RSNL1990 cC-32

Amdt.

47 .

(1) Paragraph 2(

j) of the Consumer Reporting Agencies Act is

amended by deleting the words "the Consumer

Protection Act " and substituting the word and figures "section

4.1".

(2) The Act is amended by adding immediately after

section 4 the following

Registrar and deputy

4.1

(1) The

Lieutenant-Governor in Council shall appoint a Registrar of Consumer Protection.

(2) The Lieutenant-Governor in Council may appoint

a Deputy Registrar of Consumer Protection who, in the absence or incapacity of

the registrar shall have the powers and perform the functions and duties of the

registrar.

RSNL1990 cD-24

Amdt.

48. Subsection 3(1) of the Direct Sellers Act is amended by adding immediately after the word

"Protection" the words "appointed under

section 4.1 of the Consumer Reporting Agencies Act ".

RSNL1990 cM-18 and CNLR 1006/96 Amdt.

(1) Section 8 of the Mortgage Brokers Act is repealed.

(2) Section 4 of the Mortgage Brokers Regulations is repealed.

RSNL1990 cC-31

Rep.

50. The Consumer

Protection Act is repealed.

Commencement

51. This Act comes into force on a day to be proclaimed

by the Lieutenant-Governor in Council.

Earl G. Tucker, Queen's Printer