June 1994 Charlottetown PE

Third Interim Report on Cost of Credit Disclosure

By: Richard H. Bowes, The Alberta law reform Institute

ATTENTION: La version française de toute la documentation préparée à l'avance à l'intention de la réunion annuelle est maintenant disponible sur demande. Ce document s'intitule: Loi sur la Divulgation du Cout du Crédit, [versions 3.2 et 3.21] Dispositions et Analyse.

 

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About this Report

This report discusses issues relating to cost of credit disclosure legislation ("ccdl") that the Uniform Law Section will be asked to consider at the 1994 Conference. This report supplements and is intended to be read with the following documents:

• Cost of Credit Disclosure Act, Draft 3.21 ("CCDA 3.21" or "CCDA 3.2")
• Discussion Notes on CCDA 3.2 and 3.21 (Incorporated with CCDA 3.21)
• Proposed Interest Act, Draft 2.0 ("PIA 2.0")

Most of the issues discussed in this report relate to comments on CCDA 3.2 received during May and June of this year.

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Table of Contents

REFERENCES TO LEGISLATION

I. PROCESS

A. LAST YEAR'S CONFERENCE
B. DEVELOPMENTS DURING THE PAST YEAR
1. Cost of Credit Incorporated in Internal Trade Negotiations
2. Revised Draft of CCDA (Draft 3.1)
3. Working Group Considers CCDA 3.1 and PIA 1
4. Revised Draft of CCDA (Draft 3.2) and PIA (Draft 2.0)
5. Recent Internal Trade Developments
C. PROCESS ISSUES
1. Coordination with CRMS Negotiations: CCDA
2. Proposed Interest Act

II. SUBSTANCE

A. TOPICS NOT DEALT WITH BY CCDA
1. Agreements for Sale of Land
2. Reverse Mortgages
3. Certain Issues Relating to the Sale of Goods or Services
(a) Matters that would arise in connection with cash sales
(b) Lender's liability for seller's warranties
4. Disclosure to Guarantors 19
5. Restricting Lenders' Remedies -- Acceleration Clauses

B. FUNDAMENTAL ISSUES
1. Detailed Disclosure Requirements Versus General Principles
2. Flat Charge for Fixed Loans 3. Disclosure of Finance Charge Information for Certain Leases
4. Civil Remedies for Non-compliance

C. ISSUES REGARDING SPECIFIC SECTIONS
Part 1 -- Definitions and Application
Part 2 -- Charges and Calculations
Part 3 -- Fixed Credit
Part 4 -- Open Credit
Part 5 -- Leases of Goods
Part 6 -- Compliance
Part 7 -- General

Appendix A - Written Comments on CCDA 2 and PIA 1
Appendix B - Extract from Internal Trade Agreement

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REFERENCES TO LEGISLATION

References to Canadian Legislation

References in this report to provincial ccdl are generally to "Alberta's Act", "Quebec's Act", etc. The actual names of the relevant acts are as follows:

• Alberta -- Consumer Credit Transactions Act
• B.C.-- Consumer Protection Act
• Manitoba -- The Consumer Protection Act
• New Brunswick -- Cost of Credit Disclosure Act
• Newfoundland -- The Newfoundland Consumer Protection Act
• Nova Scotia -- Consumer Protection Act
• Ontario -- Consumer Protection Act
• P.E.I. -- Consumer Protection Act
• Quebec -- Consumer Protection Act
• Saskatchewan -- The Cost of Credit Disclosure Act
• Canada -- Since 1992, the various federal acts governing banks and other federally incorporated financial institutions have contained virtually identical disclosure requirements. For convenience, this report refers only to the Bank Act and the Cost of Borrowing (Banks) Regulations ("CBBR"), but such references should be considered to include the relevant legislation and regulations governing federally incorporated insurance, loan and trust companies.

Legislation in Other Countries

United States

References in this report to "the U.S. Act" or to "TILA" are to the Truth in Lending Act

United Kingdom

References to the "U.K. Act" or "CCA" are to the Consumer Credit Act, 1974.

Australia

References to the "Australian Code" are to the Draft Consumer Credit Code. The Code, constitutes the major part of Draft Uniform Consumer Credit Laws released for comment by the Ministerial Council on Consumer Affairs in July, 1993. The draft gives effect to an Agreed Policy Statement endorsed by Ministers on May 14, 1993, and was released "for consultation on technical matters only".

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