CONSOLIDATED NEWFOUNDLAND REGULATION 773/96

Short title

1. These regulations may be cited as the Consumer Protection Regulations.

114/78 s1

Definition

2. In these regulations "Act" means the Consumer Protection Act.

114/78 s2

Application for registration

3. Application for registration under the Act shall be made to the registrar.

128/93 s1

Notice of suspension

4. Whenever the registrar suspends or cancels the registration of a lender under section 14 of the Act, he or she shall notify the lender by registered mail of the suspension or cancellation.

114/78 s4

Hearing

5. (1) Before the registrar

(a) refuses to grant registration to a lender;

(b) cancels the registration of a lender; or

he or she shall fix a time and place for a hearing before him or her of evidence against the lender and, at least 30 days before the date fixed for the hearing, shall serve the lender with a written notice of the hearing.

(2) The notice of hearing referred to in subsection (1) shall set out the time and place fixed for the hearing and the particulars of the complaints or alleged violations of the Act or these regulations in sufficient detail to enable the lender to answer them.

(3) At a hearing under this regulation, the lender may be represented by counsel and is entitled to cross‑examine under oath any witnesses giving evidence against him or her.

(4) Where the registrar orders the suspension or cancellation of the registration of a lender and an appeal from his or her order is commenced by the lender within the time provided by section 29 of the Act, the order of the registrar shall cease to have effect from the date of the service of the notice of appeal upon the registrar and shall not afterward become effective until the appeal has been dismissed, but, where the lender does not set the appeal down to be heard within 60 days of the date of the registrar's order, the order shall then become effective 60 days after its date.

(5) Notwithstanding the cancellation or suspension of the registration of a lender, he or she may continue to collect his or her accounts receivable and for that purpose may extend the time of payment, take and give up security, renew contracts or otherwise deal with borrowers and credit transactions originating before the cancellation provided no new credit is extended to a borrower.

(6) Where a lender has more than one branch in the province, the registrar may cancel or suspend the registration instead of cancelling or suspending the registration with respect to all branches.

114/78 s5

Disclosure

6. (1) Subject to the other provisions of these regulations, the percentage that a lender shall disclose under paragraph 16(1)(i) of the Act with respect to an extension of credit other than variable credit shall be the selected nominal annual percentage rate which, when applied to the manner set out in this regulation, will yield a sum or sums, the total of which will equal the cost of borrowing.

(2) The selected nominal percentage rate shall not be applied in advance, but in a manner permitted or required by subsection (3) or (4) below to the principle amount borrowed, and the unpaid balance thereof outstanding, providing the payments are made as they fall due.

(For example:

If a borrower received credit of $300 to be repaid in equal monthly instalments of $28.37 a month for 12 consecutive months, being a total of $340.44, the lender must furnish to the borrower before extending the credit a clear statement in writing showing at least

(a) the amount of credit ‑ $300.00;

(b) the cost of borrowing ‑ $40.44; and

The annual rate is the percentage that the cost of borrowing, $40.44, bears to the amount of the credit, $300, expressed as an annual rate calculated and applied monthly on the unpaid balance of the credit outstanding.)

(3) Where a contract provides for payments monthly or less frequently than monthly the rate may be applied monthly under subsection (1) may be one‑twelfth of the selected nominal annual percentage rate.

(4) Where a contract provides for payment more frequently than monthly the rate that shall be applied under subsection (1) with respect to each payment period shall be the same fraction of the selected nominal annual percentage rate that the period is of one year.

(5) The annual percentage rate to be disclosed may be a rate,

(a) that does not vary by more than 1% per year from the actual annual percentage rate of the cost of the borrowing; or

(b) that when applied in the manner prescribed by this regulation produces a cost of borrowing that does not vary from the actual cost of borrowing by more than $2.50.

(6) In addition to the tolerances permitted by section 6 where the due date of the first instalment in a credit transaction having a term of 6 months or more is not less than 15 nor more than 45 days after the credit is advanced, it may be considered by the lender, for the purpose of the statement required by subsection 16(1) of the Act, that the credit was advanced one month before the due date of the first instalment.

(7) Where an interval elapses between the date of the sale and the date from which the credit charge is computed, the rate of percentage per year shall be applied to the amount of credit the balance outstanding from the date of which the credit charge is said to be applied.

114/78 s6

Annual percentage disclosure

7. (1) Subject to the other provisions of these regulations, the annual percentage or scale of annual percentages that a lender shall disclose under paragraph 16(2)(a) of the Act with respect to an extension of variable credit shall be the selected nominal annual percentage rate or scale of nominal annual percentage rates which, when applied in the manner prescribed or permitted by subsection (2) or (3) of the unpaid balance outstanding at the end of the preceding month or period, will yield a sum or sums the total of which will equal the cost of borrowing.

(2) Where a contract provides for payments monthly or less frequently than monthly, the rate that may be applied monthly under subsection (1) may be one‑twelfth the selected nominal percentage rate that the period is of one year.

(3) Where a contract provides for payments more frequently than monthly, the rate that shall be applied under subsection (1) with respect to each payment period shall be the same fraction of the selected nominal percentage rate that the period is of one year.

(4) For the purpose of subsection (1), the cost of borrowing may be computed within a range of not in excess of $10 on the median amount within the selected range of outstanding balances where the largest amount in the range is not more than $1,000 or within a range of not in excess of $20 on the median amount in a selected range of outstanding balances where the amounts in the range are more than $1,000, provided that the cost of borrowing is applied to all outstanding balances within the range.

114/78 s7

Business loans

8. Where a lender or seller extends credit to a borrower or purchaser for business purposes, the lender or seller shall not be required to furnish to the borrower or purchaser a statement disclosing the cost of borrowing as required by section 16 of the Act.

114/78 s8

Rebate

9. (1) Where the sum remaining to be paid under an agreement for credit is prepaid in full, the borrower is entitled to a rebate of part of the cost of borrowing.

(2) Subject to subsections (3) and (4), the rebate shall not be less than the amount which is in the same proportion to the cost of borrowing as the sum of the scheduled periodic balances due after the date of prepayment, which is other than an instalment due date, which may be considered by the lender to be a date not later than the next succeeding instalment due date, is to the sum of the scheduled periodic balances under the schedules of instalments provided for by the credit transaction, that method of computation of rebate being known as the sum of the digits (rule of 78ths) method.

(3) Where the prepayment is made within the first half of the term of the contract or agreement otherwise than under an agreement for refinancing or for the extending of additional credit, the lender is entitled to retain out of the rebate calculated under subsection (2) an amount equal to $10 or one‑half of the rebate whichever is the lesser.

(4) Where the amount of the rebate calculated under subsection (2), minus the deduction from it permitted by subsection (3), is less than $2, the borrower is not entitled to a rebate of the cost of borrowing.

114/78 s9

Extension of credit

10. In a representation referred to in subsection 19(2) of the Act by a lender who is a seller

(a) in the case of extension of credit other than variable credit, the lender shall advertise the maximum periodic payment which will be required to retire the debt including the cost of borrowing under the credit plan of the seller; and

(b) in the case of extension of variable credit, the lender shall advertise the maximum periodic payment which will be required, if the purchaser makes no other purchase on his or her account, to retire the debt including the cost of borrowing under the credit plan of the lender,

without in either case detailing the other terms of the contract set out in subsection 19(2) of the Act, provided the lender in the advertisement refers prospective customers to the published description of his or her account, which includes the information set out in the subsection.

114/78 s10

Where lender isn't seller

11. In a representation of the type referred to in subsection 19(2) of the Act made by a lender who is not a seller the lender may advertise

(a) the minimum and maximum loan sizes offered by the lender;

(b) the maximum term of the loans offered by the lender; or

(c) the amount of the monthly repayments for specific loan sizes, provided the number of instalments required to pay the entire amount secured by the loan transaction is also set out,

without detailing the other terms of the contract set out in subsection 19(2) of the Act.

114/78 s11

Exemptions

12. The Act does not apply to

(a) loans made by life insurance companies to policyholders solely on the security of the cash surrender values of their policies; and

(b) fees for registration of loan and finance companies required to be registered under the Loan and Finance Corporations Licensing Act.

114/78 s12

Repeal

13. The Newfoundland Consumer Protection Regulations, 1970, Newfoundland Regulation 114/78, are repealed.