Regulations Amending Certain Department of Finance Regulations (Miscellaneous Program): SOR/2020-47
Canada Gazette, Part II, Volume 154, Number 7
Registration
SOR/2020-47 March 16, 2020
BANK ACT
INSURANCE COMPANIES ACT
TRUST AND LOAN COMPANIES ACT
P.C. 2020-139 March 13, 2020
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Regulations Amending Certain Department of Finance Regulations (Miscellaneous Program) pursuant to
- (a) sections 448.3 footnote a, 449.1 footnote b, 450 footnote c, 451, 452 footnote d, 452.1 footnote e, 454 footnote f, 455 footnote g, subsections 455.01(3) footnote h and 456(1) footnote i, sections 458.3 footnote j, 459 footnote k, 459.4 footnote l, 566.1 footnote m, 567 footnote n, 567.1 footnote o, 568 footnote p, 569 footnote q, 570 footnote r, 570.1 footnote s, 572 footnote t, 573 footnote u, subsection 574(1) footnote v, sections 575.1 footnote w, 576footnote q, 576.2 footnote x, 978 footnote y, 995 footnote z, 996footnote z, 998footnote z, 1002footnote z and 1003footnote z of the Bank Act footnote 1;
- (b) sections 479.1 footnote 2, 480 footnote 3, 482 footnote 4, 482.1 footnote 5, 484z.5, 485 footnote 6, 488.1 footnote 7, 489.2 footnote 8, 598.1 footnote 9, 599 footnote 10, 601 footnote 11, 601.1 footnote 12, 602z.12, 603 footnote 13, 606.1 footnote 14, 607.1 footnote 15, subsection 1021(1) footnote 16, sections 1037 footnote 17, 1038z.17, 1040z.17, 1044z.17 and 1045z.17 of the Insurance Companies Act footnote 18; and
- (c) sections 434.1 footnote 19, 435.1 footnote 20, 436 footnote 21, 438 footnote 22, 438.1 footnote 23, 440 footnote 24, 443.1 footnote 25, 443.2 footnote 26, 444.3 footnote 27, 531 footnote 28, 539.06 footnote 29539.07z.29, 539.11z.29 and 539.12z.29 of the Trust and Loan Companies Act. footnote 30
Regulations Amending Certain Department of Finance Regulations (Miscellaneous Program)
Bank Act
Cost of Borrowing (Banks) Regulations
1 Paragraph 6(2.4)(c) of the Cost of Borrowing (Banks) Regulations footnote 31 is replaced by the following:
- (c) margins above, below and to either side of the text so that white space is provided around the text and the text is clearly visible; and
2 Subsection 6.1(4) of the Regulations is replaced by the following:
(4) If the consent referred to in subsection (2) or (3) is given orally by a borrower, the bank must provide confirmation of that consent to the borrower in writing, in paper or electronic form.
3 Paragraph 7(2)(d) of the Regulations is replaced by the following:
- (d) favourable terms that reduce the cost of borrowing are provided in the credit agreement.
4 Paragraph 16(1)(b) of the Regulations is replaced by the following:
- (b) the bank shall refund or credit the borrower with the proportional amount, calculated in accordance with the formula set out in subsection (2), of any charges for the service paid for by the borrower or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.
Cost of Borrowing (Authorized Foreign Banks) Regulations
5 Paragraph 6(2.4)(c) of the Cost of Borrowing (Authorized Foreign Banks) Regulations footnote 32 is replaced by the following:
- (c) margins above, below and to either side of the text so that white space is provided around the text and the text is clearly visible; and
6 Subsection 6.1(4) of the Regulations is replaced by the following:
(4) If the consent referred to in subsection (2) or (3) is given orally by a borrower, the authorized foreign bank must provide confirmation of that consent to the borrower in writing, in paper or electronic form.
7 Paragraph 7(2)(d) of the Regulations is replaced by the following:
- (d) favourable terms that reduce the cost of borrowing are provided in the credit agreement.
8 Paragraph 16(1)(b) of the Regulations is replaced by the following:
- (b) the bank shall refund or credit the borrower with the proportional amount, calculated in accordance with the formula set out in subsection (2), of any charges for the service paid for by the borrower or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.
Principal Protected Notes Regulations
9 Paragraph 3(m) of the Principal Protected Notes Regulations footnote 33 is repealed.
10 The portion of section 8 of the Regulations before paragraph (a) is replaced by the following:
Detailed information
8 The information referred to in paragraphs 3(a) to (l) respecting the principal protected notes offered by an institution must be disclosed by the institution in a full and complete manner
11 The portion of section 9 of the Regulations before paragraph (a) is replaced by the following:
Information — current value
9 An institution must disclose the following information to an investor who makes an inquiry concerning the value of their principal protected note on a specified day:
12 Section 11 of the Regulations is replaced by the following:
Information — index or reference points
11 If a principal protected note ceases to be linked to an index or reference point that was to be used to determine the interest payable under the note and, as a result, no interest will be paid, the institution must disclose that fact to the investor.
Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations
13 Subsection 3(1) of the Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations footnote 34 is replaced by the following:
3 (1) A statement of account in respect of a billing cycle for a credit card must be sent by an institution to the borrower after the last day of that billing cycle.
14 (1) The portion of subsection 7(2) of the Regulations before paragraph (a) is replaced by the following:
(2) An institution may not communicate or attempt to communicate with a debtor, any member of a debtor’s family or household, any relative, neighbour, friend or acquaintance of the debtor or the debtor’s employer by any means, or in any manner or with a frequency that constitutes harassment, including:
(2) Paragraph 7(2)(a) of the French version of the Regulations is replaced by the following:
- a) menacer ou intimider oralement ou employer un langage blasphématoire ou violent;
(3) Paragraph 7(2)(b) of the Regulations is replaced by the following:
- (b) the use of undue pressure; or
(4) The portion of subsection 7(3) of the French version of the Regulations before paragraph (a) is replaced by the following:
(3) Sauf pour obtenir l’adresse ou le numéro de téléphone du débiteur, l’institution ne peut communiquer ou tenter de communiquer avec tout membre de sa famille, toute personne qui habite dans sa résidence ou ses voisins, amis ou connaissances à moins que, selon le cas :
(5) Paragraph 7(4) of the Regulations is replaced by the following:
(4) If the consent referred to in paragraph (3)(b) is given orally by the debtor, the institution must provide confirmation of that consent to the debtor in writing, in paper or electronic form.
(6) The portion of subsection 7(7) of the French version of the Regulations before paragraph (a) is replaced by the following:
(7) Sauf si le débiteur y a consenti par écrit, l’institution ne peut communiquer avec le débiteur, tout membre de sa famille, toute personne qui habite dans sa résidence ou ses voisins, amis, employeurs, connaissances ou garants :
(7) Subsection 7(14) of the Regulations is replaced by the following:
(14) An institution may not, for the purpose of attempting to collect a debt, use any document that falsely purports to originate from any court within or outside Canada.
Electronic Documents (Banks and Holding Companies) Regulations
15 (1) Paragraph 5(2)(c) of the French version of the Electronic Documents (Banks and Holding Companies) Regulations footnote 35 is replaced by the following:
- c) du fait que tout document électronique sera conservé pour la période indiquée dans l’avis et mis à sa disposition et de sa responsabilité de prendre copie du document;
(2) Subsection 5(3) of the Regulations is repealed.
(3) Subsection 5(5) of the Regulations is replaced by the following:
(5) If the addressee’s consent is provided orally, the originator or the person acting for the originator shall provide the addressee in writing, in paper or electronic form, with the information referred to in subsection (2) and confirm the information referred to in subsection (4).
16 Subsections 6(2) and (3) of the Regulations are replaced by the following:
(2) If the addressee revokes their consent, the originator or the person acting for the originator must provide the addressee with confirmation, in writing, in paper or electronic form, of the revocation specifying when revocation of consent takes effect.
Deposit Type Instruments Regulations
17 Subsection 3(2) of the Deposit Type Instruments Regulations footnote 36 is replaced by the following:
Exception: agreements entered into by telephone
(2) In the case of an agreement for the issuance of a deposit type instrument that is entered into by telephone, the institution is not required to provide the disclosure referred to in subsection (1) in writing on or before entering into the agreement. However, the institution must provide the written disclosure after entering into the agreement.
Registered Products Regulations
18 Subsection 2(3) of the Registered Products Regulations footnote 37 is replaced by the following:
Accounts opened by telephone
(3) An institution that only provides information orally in accordance with paragraph (2)(a) must provide the same information in writing after opening the account or entering into the agreement.
Negative Option Billing Regulations
19 Subsection 3(2) of the Negative Option Billing Regulations footnote 38 is replaced by the following:
(2) If the consent is provided orally, the institution must provide the person with confirmation in writing of their express consent for the new product or service.
20 Subsection 5(2) of the Regulations is replaced by the following:
(2) An institution that provides the initial disclosure statement orally must also provide it in writing.
21 Section 7 of the Regulations is replaced by the following:
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 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.
22 Paragraph 8(2)(b) of the Regulations is replaced by the following:
- (b) 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.
23 The portion of section 9 of the Regulations before the formula is replaced by the following:
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 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
Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations
24 (1) Paragraph 7(e) of the Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations footnote 39 is replaced by the following:
- (e) if a person has made a complaint to it in respect of a bank or an authorized foreign bank that is a member of another external complaints body, provide the person with the name of that other body and its contact information;
(2) Paragraph 7(g) of the Regulations is replaced by the following:
- (g) transfer a complaint received by it and all related information that is in its possession or control to another external complaints body if a bank or an authorized foreign bank that is a party to the complaint becomes a member of that other body before a final recommendation is made in respect of the complaint;
(3) The portion of paragraph 7(h) of the Regulations before subparagraph (i) is replaced by the following:
- (h) advise the parties to a complaint that is transferred to it by another external complaints body in writing
(4) Paragraph 7(i) of the Regulations is replaced by the following:
- (i) advise the Commissioner in writing if it determines that a complaint raises a systemic issue;
(5) Paragraph 7(o) of the Regulations is replaced by the following:
- (o) make the annual report available to the public after it is submitted to the Commissioner;
25 Section 9 of the Regulations is replaced by the following:
Information relating to complaints
9 A bank or an authorized foreign bank must provide the external complaints body of which it is a member with all information in its possession or control that relates to a complaint after the external complaints body notifies it that the complaint has been received in respect of it.
Insurance Companies Act
Cost of Borrowing (Canadian Insurance Companies) Regulations
26 Paragraph 6(2.4)(c) of the Cost of Borrowing (Canadian Insurance Companies) Regulations footnote 40 is replaced by the following:
- (c) margins above, below and to either side of the text so that white space is provided around the text and the text is clearly visible; and
27 Subsection 6.1(4) of the Regulations is replaced by the following:
(4) If the consent referred to in subsection (2) or (3) is given orally by a borrower, the company must provide confirmation of that consent to the borrower in writing, in paper or electronic form.
28 Paragraph 7(2)(d) of the Regulations is replaced by the following:
- (d) favourable terms that reduce the cost of borrowing are provided in the credit agreement.
29 Paragraph 16(1)(b) of the Regulations is replaced by the following:
- (b) the company shall refund or credit the borrower with the proportional amount, calculated in accordance with the formula set out in subsection (2), of any charges for the service paid for by the borrower or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.
Cost of Borrowing (Foreign Insurance Companies) Regulations
30 Paragraph 6(2.4)(c) of the Cost of Borrowing (Foreign Insurance Companies) Regulations footnote 41 is replaced by the following:
- (c) margins above, below and to either side of the text so that white space is provided around the text and the text is clearly visible; and
31 Subsection 6.1(4) of the Regulations is replaced by the following:
(4) If the consent referred to in subsection (2) or (3) is given orally by a borrower, the foreign company must provide confirmation of that consent to the borrower in writing, in paper or electronic form.
32 Paragraph 7(2)(d) of the Regulations is replaced by the following:
- (d) favourable terms that reduce the cost of borrowing are provided in the credit agreement.
33 Paragraph 16(1)(b) of the Regulations is replaced by the following:
- (b) the foreign company shall refund or credit the borrower with the proportional amount, calculated in accordance with the formula set out in subsection (2), of any charges for the service paid for by the borrower or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.
Electronic Documents (Insurance and Insurance Holding Companies) Regulations
34 (1) Paragraph 5(2)(c) of the French version of the Electronic Documents (Insurance and Insurance Holding Companies) Regulations footnote 42 is replaced by the following:
- c) du fait que tout document électronique sera conservé pour la période indiquée dans l’avis et mis à sa disposition et de sa responsabilité de prendre copie du document;
(2) Subsection 5(3) of the Regulations is repealed.
(3) Subsection 5(5) of the Regulations is replaced by the following:
(5) If the addressee’s consent is provided orally, the originator or the person acting for the originator shall provide the addressee in writing, in paper or electronic form, with the information referred to in subsection (2) and confirm the information referred to in subsection (4).
35 Subsections 6(2) and (3) of the Regulations are replaced by the following:
(2) If the addressee revokes their consent, the originator or the person acting for the originator must provide the addressee with confirmation, in writing, in paper or electronic form, of the revocation specifying when revocation of consent takes effect.
Trust and Loan Companies Act
Cost of Borrowing (Trust and Loan Companies) Regulations
36 Paragraph 6(2.4)(c) of the Cost of Borrowing (Trust and Loan Companies) Regulations footnote 43 is replaced by the following:
- (c) margins above, below and to either side of the text so that white space is provided around the text and the text is clearly visible; and
37 Subsection 6.1(4) of the Regulations is replaced by the following:
(4) If the consent referred to in subsection (2) or (3) is given orally by a borrower, the company must provide confirmation of that consent to the borrower in writing, in paper or electronic form.
38 Paragraph 7(2)(d) of the Regulations is replaced by the following:
- (d) favourable terms that reduce the cost of borrowing are provided in the credit agreement.
39 Paragraph 16(1)(b) of the Regulations is replaced by the following:
- (b) the company shall refund or credit the borrower with the proportional amount, calculated in accordance with the formula set out in subsection (2), of any charges for the service paid for by the borrower or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.
Electronic Documents (Trust and Loan Companies) Regulations
40 (1) Paragraph 5(2)(c) of the French version of the Electronic Documents (Trust and Loan Companies) Regulations footnote 44 is replaced by the following:
- c) du fait que tout document électronique sera conservé pour la période indiquée dans l’avis et mis à sa disposition et de sa responsabilité de prendre copie du document;
(2) Subsection 5(3) of the Regulations is repealed.
(3) Subsection 5(4) of the French version of the Regulations is replaced by the following:
(4) Si le consentement est donné par écrit, sur support papier ou électronique, il mentionne le nom du système de traitement de l’information désigné pour la réception et est accompagné de la liste, sur support papier ou électronique, des avis, documents et autre information à l’égard desquels il est donné.
(4) Subsection 5(5) of the Regulations is replaced by the following:
(5) If the addressee’s consent is provided orally, the originator or the person acting for the originator shall provide the addressee in writing, in paper or electronic form, with the information referred to in subsection (2) and confirm the information referred to in subsection (4).
41 Subsections 6(2) and (3) of the Regulations are replaced by the following:
(2) If the addressee revokes their consent, the originator or the person acting for the originator must provide the addressee with confirmation, in writing, in paper or electronic form, of the revocation specifying when revocation of consent takes effect.
Coming into Force
42 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
In 2010, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) raised a number of issues regarding provisions in various financial consumer protection regulations. The issues raised relate to discrepancies between the English and French versions of the regulatory text, duplication, and vague or ambiguous language. The SJCSR has recommended that these issues be addressed.
Objective
The amendments have the following objectives:
- to correct discrepancies between the French and English versions;
- to add clarity to regulatory provisions; and
- to correct typographical or grammatical errors.
Description
The Regulations Amending Certain Department of Finance Regulations (Miscellaneous Program) [the Amending Regulations] modify the financial consumer protection regulations to address vague or ambiguous language, reduce duplication, and address discrepancies between the English and French versions of the regulatory texts.
Examples of changes that address vague or ambiguous language are as follows:
- Credit Business Practices Regulations: The requirement for information to be provided “without delay” is vague and ambiguous. This term will be removed from the regulations, as it is implied that obligations imposed upon banks should be undertaken in a timely fashion unless a specific time limit is prescribed.
- Principal Protected Notes Regulations: The requirement for banks to disclose to consumers “any other information that could reasonably be expected to affect an investor’s decision to purchase the note” is vague and ambiguous. As such, this requirement will be removed from the regulations.
- Cost of Borrowing Regulations: The requirement to disclose information such that “sufficient white space is provided around the text” is vague and ambiguous. As such, the requirement will be amended to align with other similar requirements in the same regulation by removing the word “sufficient,” so that text must be clearly visible.
In light of the SJCSR’s review raising concerns that “without delay” is an ambiguous term, Finance Canada identified the following regulations that also contain this term; they will also be amended accordingly: Complaints Regulations, Cost of Borrowing Regulations, Negative Option Billing Regulations and Principal Protected Notes Regulations.
An example of a change that would reduce duplication between a regulatory provision and its enabling legislative authority is as follows:
- Electronic Documents Regulations: The requirements related to a consumer’s ability to access and retain a copy of electronic documents in which the consumer has provided their consent to receive electronic documents is duplicative of the same requirement found in the enabling authority. Therefore, such requirements will be removed from these regulations.
Examples of changes that would improve consistency between the French and English versions of these regulations are as follows:
- Credit Business Practices Regulations: The English version of the regulatory text identifies certain individuals who have a relationship with a debtor that institutions are prohibited from contacting for the purposes of collecting payment on the debt (i.e. a debtor, any member of the debtor’s family or household, and any relative, neighbour, friend or acquaintance of the debtor or the debtor’s employer). The French version is inconsistent, as it identifies a subset of the individuals identified in the English version: “toute personne de sa connaissance — parent, ami, voisin, employeur.” The French version will be amended to be consistent with the English version.
- Credit Business Practices Regulations: Institutions are prohibited from communicating with a debtor in a manner that constitutes harassment, including the use of “profane” language. The concept of “profane” is missing from the French version. The French version will be amended to be consistent with the English version.
- Electronic Documents Regulations: The requirement for electronic documents to be retained for a period of time is present in the English version of the regulations but is missing from the French version. As such, the French version will be amended to be consistent with the English version.
“One-for-One” Rule
The “One-for-One” Rule does not apply to these amendments, as there is no change in administrative costs or burden to business.
Small business lens
The small business lens does not apply to these amendments, as there are no costs to small business.
Rationale
The amendments are a response to the SJCSR’s review of the regulations. The amendments help to correct or improve regulations and do not impose any costs on the government or financial institutions.
Contact
Julien Brazeau
Director General
Financial Services Division
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1P 5E9
Telephone: 613‑369‑3698
Email: julien.brazeau@canada.ca