The Fair Trading Act and Credit 2011
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Transcript of The Fair Trading Act and Credit 2011
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The Fair Trading Act and Credit2011
Service Alberta
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Service Alberta
• Responsible for consumer protection in Alberta, which includes a number of regulatory measures related to consumer and creditor rights.
• Investigates consumer complaints, audits licensed businesses, oversees delegated regulatory organizations, and provides consumer education materials.
• For creditors, the key Acts Consumer Services is responsible for are the Debtors’ Assistance Act and Fair Trading Act.
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Debtors’ Assistance Act
• The Province delegates responsibility for the Orderly Payment of Debts Program (Part X of the Bankruptcy Act) to the Debtors’ Assistance Board.
• Money Mentors (formerly Credit Counselling Services of
Alberta) offers credit counselling, administers the OPD program and offers financial literacy to consumers and businesses on behalf of the Debtors’ Assistance Board.
• Assisted 4,400 clients in 2010 and returned $9.8 million to creditors with an 82% OPD success rate.
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Credit related FTA Regulations
• Collection and Debt Repayment Practices Regulation
• Cost of Credit Disclosure Regulation
• Credit and Personal Reports Regulation
• Payday Loans Regulation
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Cost of Credit Disclosure
• Recent amendments: – definition of high-ratio mortgages (20%)
– APR disclosure on open credit
• National:– pressure on credit card liability limits
– financial literacy receiving increasing attention
• FAQs:– cost of credit disclosure applies to any credit transaction
entered into in/from Alberta, there are no exceptions (though federal financial institutions are subject to federal jurisdiction)
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Credit Reporting
• Work is ongoing on harmonizing national credit reporting standards.
• Alberta Finance is reviewing the use of credit reports for
insurance purposes. • FAQs:
– Express (verifiable) consent is a requirement prior to requesting a credit report
– Business debts should not be reported unless the individual has a personal obligation for the debt (partnership, guarantee, sole proprietorship, etc.)
– Businesses/collection agencies that file inaccurate information or refuse to remove information as a way to punish a consumer can be subject to enforcement action
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Collection Practices
• Third party collection agencies and debt purchasers (debts in arrears) are regulated and must be licensed.
• Original creditors, most direct finance companies and agencies operating as first party receivables do not require a licence.
• Lawyers are exempt from the regulatory framework while they engage in the practice of law.
• Licensed collection agencies are responsible for any actions taken by lawyers that breach the regulations.
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Collection Agencies and Creditors
• Collection agencies that receive monies from debtors are required to place all monies in trust.
• Requirement for an accountants’ report by an independent auditor/accountant annually to confirm handling and liability of trust.
• Collection agencies provide a security to Service Alberta that may cover a portion of creditor losses.
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Debt Repayment Agencies
• Agencies acting on behalf of a debtor in negotiations with creditors must be licensed.
• Regulated fee caps for services provided to consumers tied to successful negotiations with creditors. No up-front fees are allowed for settlement negotiations.
• Lawyers are exempt from the regulatory framework while they engage in the practice of law.
• Monies must be held in trust prior to disbursement to creditors. Annual accountants’ report required.
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Educational Materials
• A wide variety of tipsheets, including:– Bill Collection and Debt Repayment
– What Creditors Can Do If You Don’t Pay
– Your Credit Report
• Other resources:– Identity theft resources
– Reality Choices (young adults)
– Payday Loan Calculator
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Contact Information
Darren Thomas
Director of Fair Trading (as delegated)
Phone: 780 422 8046
Fax: 780 427 3033
Email: [email protected]