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Statutes of Newfoundland and Labrador 2008


CHAPTER C-37.0001

AN ACT RESPECTING THE COST OF CONSUMER CREDIT DISCLOSURE

(Assented to June 4, 2008)

Analysis


        1.   Short title

        2.   Interpretation

              PART I
APPLICATION

        3.   Application

        4.   Delivery of disclosure statements

        5.   Disclosure

        6.   Delivery

              PART II
RIGHTS
AND OBLIGATIONS

        7.   Insurer

        8.   Cancellation of optional services

        9.   Prepayment of credit

      10.   Default charges

      11.   Invitation to defer payment and acceleration clause

      12.   Non-business credit grantors

      13.   Business credit grantors

              PART III
FIXED CREDIT

      14.   Application

      15.   Advertising

      16.   Advertising interest-free periods

      17.   Disclosure statements

      18.   Interest change disclosure

      19.   Increases in outstanding principal

      20.   Amendments

      21.   Mortgage renewal disclosure

              PART IV
OPEN CREDIT

      22.   Application

      23.   Advertising

      24.   Interest free periods

      25.   Open credit disclosure

      26.   Statements of account

      27.   Transaction description

      28.   Credit card by application

      29.   Application for credit card

      30.   Additional credit card disclosure

      31.   Limitation of liability

              PART V
LEASES OF GOODS

      32.   Application

      33.   Advertising requirements

      34.   Disclosure

      35.   Maximum liability for residual obligation lease

              PART VI
COMPLIANCE

      36.   Interpretation

      37.   Recovery of overpayments and compensation

      38.   Remedies

      39.   Assignee

              PART VII
REGULATIONS

      40.   Regulations

      41.   Fees and forms

              PART VIII
ENFORCEMENT

      42.   Offence

      43.   Act may not be waived

      44.   Limitation

      45.   Act to prevail

              PART IX
TRANSITIONAL, CONSEQUENTIAL AMENDMENTS, REPEAL
AND COMMENCEMENT

      46.   Transitional

      47.   RSNL1990 cC-32 Amdt.

      48.   RSNL1990 cD-24 Amdt.

      49.   RSNL1990 cM-18 and CNLR 1006/96 Amdt.

      50.   RSNL1990 cC-31 Rep.

      51.   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

        2. (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 is

                      (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

        3. (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

        4. (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

        5. (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

        6. (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

        7. (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

        8. (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

        9. (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

      11. (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

      13. (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

      14. (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

      15. (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

      16. (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

      17. (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

      18. (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

      19. (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

      20. (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

      21. (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

      24. (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

      26. (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

      28. (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

      29. (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

      30. (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

      31. (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

      34. (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

      36. 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

      37. (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

      38. (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

      39. (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

      40. (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 disclose the cost of borrowing to the borrower and the terms and conditions 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

      42. (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

      43. (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

      46. (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.

      49. (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.