Vol. 145, No. 11 — March 12, 2011
ARCHIVED — Negative Option Billing Regulations
Statutory authorities
Bank Act, Cooperative Credit Associations Act, Insurance Companies Act and Trust and Loan Companies Act
Sponsoring department
Department of Finance
REGULATORY IMPACT
ANALYSIS STATEMENT
For the Regulatory Impact Analysis Statement, Access to Funds Regulations.
Notice is hereby given that the Governor in Council, pursuant to sections 458.3 (see footnote a), 459.4 (see footnote b), 575.1 (see footnote c) and 576.2 (see footnote d) of the Bank Act (see footnote e), sections 385.252 (see footnote f) and 385.28 (see footnote g) of the Cooperative Credit Associations Act (see footnote h), sections 488.1 (see footnote i), 489.2 (see footnote j), 606.1 (see footnote k) and 607.1 (see footnote l) of the Insurance Companies Act (see footnote m) and sections 443.2 (see footnote n) and 444.3 (see footnote o) of the Trust and Loan Companies Act (see footnote p), proposes to make the annexed Negative Option Billing Regulations.
Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Jane Pearse, Director, Financial Institutions Division, Department of Finance, L’Esplanade Laurier, 15th floor, East Tower, 140 O’Connor Street, Ottawa, Ontario K1A 0G5 (tel.: 613-992-1631; fax: 613-943-1334; email: finlegis@fin. gc.ca).
Ottawa, March 3, 2011
JURICA ČAPKUN
Assistant Clerk of the Privy Council
NEGATIVE OPTION BILLING REGULATIONS
INTERPRETATION
1. The following definitions apply in these Regulations.
“institution” means any of the following:
(a) a bank, as defined in section 2 of the Bank Act;
(b) an authorized foreign bank, as defined in section 2 of the Bank Act;
(c) a retail association, as defined in section 2 of the Cooperative Credit Associations Act;
(d) a company, as defined in subsection 2(1) of the Insurance Companies Act;
(e) a foreign company, as defined in subsection 2(1) of the Insurance Companies Act;
(f) a company, as defined in section 2 of the Trust and Loan Companies Act. (institution)
“optional product or service” means a product or service that is offered or provided to a person by an institution for an additional fee and is available only with an agreement for a primary financial product or service provided by the institution. (produit ou service optionnel)
“primary financial product or service” does not include a product or service that is offered or provided by a company or a foreign company as defined in the Insurance Companies Act to insure a risk. (produit ou service financier de base)
APPLICATION
2. (1) These Regulations apply to institutions, to the affiliates that they control and to the agents and representatives of those institutions and affiliates.
(2) These Regulations apply only in respect of natural persons who subscribe, or apply to subscribe, to any of an institution’s products or services for non-business purposes.
CONSENT FOR NEW PRODUCTS OR SERVICES
3. (1) Before providing a person with a new primary financial or optional product or service, an institution must first obtain the person’s express consent to do so, either orally or in writing.
(2) If the consent is provided orally, the institution must provide the person without delay with confirmation in writing of their express consent for the new product or service.
(3) The use by the person of the new product or service, or any product or service related to the new product or service, does not constitute express consent for the purpose of subsection (1).
(4) Any communication from an institution seeking a person’s express consent must be made in language, and presented in a manner, that is clear, simple and not misleading.
DISCLOSURE — OPTIONAL PRODUCTS AND SERVICES
MANNER AND CONTENT OF DISCLOSURE STATEMENT
4. (1) Any disclosure statement that is required to be provided by an institution under these Regulations must be made in language, and presented in a manner, that is clear, simple and not misleading.
(2) Any disclosure statement that is sent by mail is considered to have been provided on the fifth business day after the postmark date.
5. (1) Before a person provides their express consent to receive an optional product or service from an institution, the institution must provide them, orally or in writing, with an initial disclosure statement that contains the information referred to in paragraphs 6(a) to (d) or a summary of that information.
(2) An institution that provides the initial disclosure statement orally must also, without delay, provide it in writing.
6. Unless it has previously disclosed in writing the information required under this section, an institution that enters into an agreement with a person for an optional product or service must, within 30 days after entering into the agreement, provide the person with a subsequent disclosure statement containing all relevant information about the product or service, including:
(a) a description of the product or service;
(b) the term of the agreement;
(c) the charges for the product or service or the method for determining the charges and an example to illustrate the method;
(d) the conditions under which the person may cancel the product or service;
(e) the date from which the product or service is available for use and, if different, from which charges apply; and
(f) the steps required to use the product or service.
7. Any disclosure statement made in relation to an optional product or service that is provided on an ongoing basis, other than one provided in relation to a credit agreement, must specify that the person may cancel the product or service by notifying the institution that it is to be cancelled, that the cancellation will be effective as of the last day of the billing cycle or 30 days after the notification is received, whichever is earlier, and that on receipt of the notice, the institution must, without delay, refund or credit the person with the amount of any charges paid by the person for any part of the product or service that is unused as of the day the cancellation takes effect, to be calculated in accordance with the formula set out in section 9.
NOTICE OF CHANGES
8. (1) An institution that makes any changes to the terms and conditions that apply in respect of an agreement for an optional product or service must, not less than 30 days before the day on which the changes take effect, disclose in writing to any person who subscribes to the product or service the changes to the information that was required to be disclosed in the initial disclosure statement.
(2) If a person agrees to a promotional, preferential, introductory or special offer for an optional product or service, the institution must disclose to the person in a subsequent disclosure statement
(a) not less than 30 days before the expiry of an offer that comes to an end after a set period of time, the date on which the offer will come to an end and the charges that will be imposed for use of the product or service after that date; or
(b) without delay after the last use that is subject to an offer that expires after a set amount of use, the fact that the offer has come to an end and the method of imposing charges for subsequent use of the product or service.
CANCELLATION OF OPTIONAL PRODUCTS OR SERVICES
9. An institution that receives from a person a notice of cancellation of an optional product or service that is provided on an ongoing basis, other than one provided in relation to a credit agreement, must, without delay, refund or credit the person with the amount of any charges paid by the person for any part of the product or service that is unused as of the day the cancellation takes effect, calculated in accordance with the formula
A × (B – C) / B
where
A is the amount of the charges;
B is the period between the imposition of the charges and the time when the services were, before the cancellation, scheduled to end; and
C is the period between the imposition of the charges and the cancellation.
COMING INTO FORCE
10. These Regulations come into force on the day on which they are registered.
[11-1-o]
Footnote a
S.C. 2009, c. 2, s. 271
Footnote b
S.C. 2007, c. 6, s. 37
Footnote c
S.C. 2009, c. 2, s. 274
Footnote d
S.C. 2007, c. 6, s. 93
Footnote e
S.C. 1991, c. 46
Footnote f
S.C. 2009, c. 2, s. 278
Footnote g
S.C. 2007, c. 6, s. 170
Footnote h
S.C. 1991, c. 48
Footnote i
S.C. 2009, c. 2, s. 284
Footnote j
S.C. 2007, c. 6, s. 231
Footnote k
S.C. 2009, c. 2, s. 286
Footnote l
S.C. 2007, c. 6, s. 283
Footnote m
S.C. 1991, c. 47
Footnote n
S.C. 2009, c. 2, s. 291
Footnote o
S.C. 2007, c. 6, s. 368
Footnote p
S.C. 1991, c. 45