Borrowing Costs

Definition of ``cost of borrowing''

385.14 For the purposes of this section and sections 385.15 to 385.24, ``cost of borrowing'' means, in respect of a loan made by a retail association,

    (a) the interest or discount applicable to the loan;

    (b) any amount charged in connection with the loan that is payable by the borrower to the association; and

    (c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, ``cost of borrowing'' does not include any charge prescribed to be excluded from the cost of borrowing.

Rebate of borrowing costs

385.15 (1) If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is not secured by a mortgage on real property and is required to be repaid either on a fixed future date or by instalments, the association shall, if there is a prepayment of the loan, rebate to the borrower a portion of the charges included in the cost of borrowing in respect of the loan.

Exception

(2) The charges to be rebated do not include the interest or discount applicable to the loan.

Regulations

(3) The Governor in Council may make regulations governing the rebate of charges under subsection (1). The rebate shall be made in accordance with those regulations.

Disclosing borrowing costs

385.16 (1) A retail association shall not make a loan to a natural person that is repayable in Canada unless the cost of borrowing, as calculated and expressed in accordance with section 385.17, and other prescribed information have in the prescribed manner and at the prescribed time been disclosed by the association to the borrower.

Non-applicati on

(2) Subsection (1) does not apply in respect of a loan that is of a prescribed class of loans.

Calculating borrowing costs

385.17 The cost of borrowing shall be calculated, in the prescribed manner, on the basis that all obligations of the borrower are duly fulfilled and shall be expressed as a rate per annum and, in prescribed circumstances, as an amount in dollars and cents.

Additional disclosure

385.18 (1) If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 are applicable and the loan is required to be repaid either on a fixed future date or by instalments, the association shall disclose to the borrower, in accordance with the regulations,

    (a) whether the borrower has the right to repay the amount borrowed before the maturity of the loan and, if applicable,

      (i) any terms and conditions relating to that right, including the particulars of the circumstances in which the borrower may exercise that right, and

      (ii) whether, in the event that the borrower exercises the right, any portion of the cost of borrowing is to be rebated, the manner in which any such rebate is to be calculated or, if a charge or penalty will be imposed on the borrower, the manner in which the charge or penalty is to be calculated;

    (b) in the event that an amount borrowed is not repaid at maturity or, if applicable, an instalment is not paid on the day the instalment is due to be paid, particulars of the charges or penalties to be paid by the borrower because of the failure to repay or pay in accordance with the contract governing the loan;

    (c) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing or the loan agreement as may be prescribed;

    (d) particulars of any other rights and obligations of the borrower; and

    (e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Disclosure in credit card applications

(2) A retail association shall, in accordance with the regulations, at such time and in such manner as may be prescribed, provide prescribed information in any application forms or related documents that it prepares for the issuance of credit, payment or charge cards and provide prescribed information to any person applying to it for a credit, payment or charge card.

Disclosure re credit cards

(3) If a retail association issues or has issued a credit, payment or charge card to a natural person, the association shall, in addition to disclosing the costs of borrowing in respect of any loan obtained through the use of the card, disclose to the person, in accordance with the regulations,

    (a) any charges or penalties described in paragraph (1)(b);

    (b) particulars of the person's rights and obligations;

    (c) any charges for which the person becomes responsible by accepting or using the card;

    (d) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing or the loan agreement as may be prescribed; and

    (e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Additional disclosure re other loans

(4) If a retail association enters into or has entered into an arrangement, including a line of credit, for the making of a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is not a loan in respect of which subsection (1) or (3) applies, the association shall, in addition to disclosing the costs of borrowing, disclose to the person to whom the loan is made, in accordance with the regulations,

    (a) any charges or penalties described in paragraph (1)(b);

    (b) particulars of the person's rights and obligations;

    (c) any charges for which the person is responsible under the arrangement;

    (d) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing under the arrangement as may be prescribed; and

    (e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Renewal statement

385.19 If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is secured by a mortgage on real property, the association shall disclose to the borrower, at such time and in such manner as may be prescribed, such information as may be prescribed respecting the renewal of the loan.

Disclosure in advertising

385.2 No person shall authorize the publication, issue or appearance of any advertisement in Canada relating to arrangements referred to in subsection 385.18(4), loans, credit cards, payment cards or charge cards, offered to natural persons by a retail association, and purporting to disclose prescribed information about the cost of borrowing or about any other matter unless the advertisement contains such information as may be required by the regulations, in such form and manner as may be prescribed.

Regulations re borrowing costs

385.21 The Governor in Council may make regulations

    (a) respecting the manner in which, and the time at which, a retail association is to disclose to a borrower

      (i) the cost of borrowing,

      (ii) any rebate of the cost of borrowing, and

      (iii) any other information relating to a loan, arrangement, credit card, payment card or charge card referred to in section 385.18;

    (b) respecting the contents of any statement disclosing the cost of borrowing and other information required to be disclosed by a retail association to a borrower;

    (c) respecting the manner of calculating the cost of borrowing;

    (d) respecting the circumstances under which the cost of borrowing is to be expressed as an amount in dollars and cents;

    (e) specifying any class of loans that are not to be subject to section 385.15, subsection 385.16(1) or 385.18(1) or (4) or section 385.19 or 385.2 or the regulations or any specified provisions of the regulations;

    (f) respecting the manner in which and the time at which any rights, obligations, charges or penalties referred to in sections 385.15 to 385.2 are to be disclosed;

    (g) prohibiting the imposition of any charge or penalty referred to in section 385.18 or providing that the charge or penalty, if imposed, will not exceed a prescribed amount;

    (h) respecting the nature or amount of any charge or penalty referred to in paragraph 385.18(1)(b), (3)(a) or (4)(a) and the costs of the retail association that may be included or excluded in the determination of the charge or penalty;

    (i) respecting the method of calculating the amount of rebate of the cost of borrowing, or the portion of the cost of borrowing referred to in subparagraph 385.18(1)(a)(ii);

    (j) respecting advertisements made by a retail association regarding arrangements referred to in subsection 385.18(4), loans, credit cards, payment cards or charge cards;

    (k) respecting the renewal of loans; and

    (l) respecting such other matters or things as are necessary to carry out the purposes of sections 385.15 to 385.2.

Complaints

Procedures for dealing with complaints

385.22 (1) A retail association shall

    (a) establish procedures for dealing with complaints made by persons having requested or received products or services in Canada from the retail association;

    (b) designate an officer or employee of the association to be responsible for implementing those procedures; and

    (c) designate one or more officers or employees of the association to receive and deal with those complaints.

Procedures to be filed with Commissioner

(2) A retail association shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).

Obligation to be member

385.23 In any province, if there is no law of the province that makes a retail association subject to the jurisdiction of an organization that deals with complaints made by persons having requested or received products or services in the province from a retail association, the retail association shall be a member of an organization that is not controlled by it and that deals with those complaints that have not been resolved to the satisfaction of the persons under procedures established by retail associations under paragraph 385.22(1)(a).

Information on contacting Agency

385.24 (1) A retail association shall, in the prescribed manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about a deposit account, an arrangement referred to in subsection 385.18(4), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or about any other obligation of the retail association under a consumer provision.

Report

(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting

    (a) procedures for dealing with complaints established by retail associations pursuant to paragraph 385.22(1)(a); and

    (b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a retail association.

Miscellaneous

Prepayment protected

385.25 (1) A retail association shall not make a loan to a natural person that is repayable in Canada, the terms of which prohibit prepayment of the money advanced or any instalment thereon before its due date.

Minimum balance

(2) Except by express agreement between the retail association and the borrower, the making in Canada of a loan or advance by a retail association to a borrower shall not be subject to a condition that the borrower maintain a minimum credit balance with the association.

Non-applicati on of subsection (1)

(3) Subsection (1) does not apply in respect of a loan that is

    (a) secured by a mortgage on real property; or

    (b) made for business purposes and the principal amount of which is more than $100,000 or such other amount as may be prescribed.

Government cheques

(4) A retail association shall not make a charge

    (a) for cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General's account in the Bank of Canada, in an association or in any other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament;

    (b) for cashing any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund; or

    (c) in respect of any cheque or other instrument that is

      (i) drawn in favour of the Receiver General, the Government of Canada or any department thereof or any public officer acting in the capacity of a public officer, and

      (ii) tendered for deposit to the credit of the Receiver General.

Deposits of Government of Canada

(5) Nothing in subsection (4) precludes any arrangement between the Government of Canada and a retail association concerning

    (a) compensation for services performed by the association for the Government of Canada; or

    (b) interest to be paid on any or all deposits of the Government of Canada with the association.

Regulations re customer information

385.26 The Governor in Council may make regulations

    (a) requiring a retail association to establish procedures regarding the collection, retention, use and disclosure of any information about its customers or any class of customers;

    (b) requiring a retail association to establish procedures for dealing with complaints made by a customer about the collection, retention, use or disclosure of information about the customer;

    (c) respecting the disclosure by a retail association of information relating to the procedures referred to in paragraphs (a) and (b);

    (d) requiring a retail association to designate the officers and employees of the association who are responsible for

      (i) implementing the procedures referred to in paragraph (b), and

      (ii) receiving and dealing with complaints made by a customer of the association about the collection, retention, use or disclosure of information about the customer;

    (e) requiring a retail association to report information relating to

      (i) complaints made by customers of the association about the collection, retention, use or disclosure of information, and

      (ii) the actions taken by the association to deal with the complaints; and

    (f) defining ``information'', ``collection'' and ``retention'' for the purposes of paragraphs (a) to (e) and the regulations made under those paragraphs.

Notice of branch closure

385.27 (1) Subject to regulations made under subsection (5), a member association with a branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, shall give notice in accordance with those regulations before closing that branch or having it cease to carry on either of those activities.

Pre-closure meeting

(2) After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner may, in prescribed situations, require the member association to convene and hold a meeting between representatives of the member association, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities.

Meeting details

(3) The Commissioner may establish rules for convening a meeting referred to in subsection (2) and for its conduct.