Third Interim Report on Cost of Credit Disclosure Act 1994

Part 7 -- General

Section 62 Form of disclosure

With respect to subsection (3), which deals with the presentation of information in advertisements, a commentator made the following point:

Some recognition must be given to the fact that some disclosure information is quite involved. What might be appropriately placed in a magazine or newspaper is unworkable in a TV or radio ad. This matter must be dealt with or certain media will not be able to be used.

The commentator went on to refer to the possibility that TV or radio advertisements could refer viewers or listeners to newspaper advertisements or to dealers for further information. Although the commentator did not do so, he could have supported his argument by mentioning that both houses of the U.S. Congress have recently passed bills that would exempt radio advertisements from normal TILA disclosure requirements, provided that the advertisement give a toll-free number or refer to a locally-published newspaper where the relevant disclosures could be obtained.

Actually, however, I am not convinced that CCDA's disclosure requirements for advertisements would be all that difficult to comply with even in a radio advertisement. CCDA's advertising requirements are not nearly as onerous as TILA's. The one exception to this would be the advertising requirements set out in section 14.1 regarding RLRF programs: obviously, it would be a little difficult to set out the table described in section 14.1(5) in a radio advertisement.

Recommendation 25:

Consideration should be given to providing alternative disclosure requirements for radio or television advertising, but only where it would be impracticable to make the required disclosures in such media.

Section 68

Issue 1

The language of subsection (2) is broader than was intended. As pointed out in the "across the page" Discussion Note, this subsection "is intended to make it clear that the civil consequences of a lender's failure to comply with the act flow through to an assignee". But the wording of subsection (2) is broader than what is required to achieve that purpose; the wording would apply to matters between the borrower and lender that have nothing to do with CCDA. The wording should be confined to matters arising out of contraventions of CCDA.

Recommendation 26:

Subsection (2) should be modified to read as follows:

(2) Where an assignor has contravened this act in relation to a loan agreement prior to the relevant assignment, the assignee has no greater rights regarding the enforcement of the agreement than the assignor had immediately before the assignment.

Issue 2

A commentator pointed out that the relationship between subsection (2) and other relevant provincial legislation needs to be carefully considered. The commentator noted that, for example, Ontario's Act has a provision similar to CCDA section 68, but that the Ontario Act specifically excludes mortgages.[27] The commentator notes that Ontario's Conveyancing and Law of Property Act governs the assignment of mortgages, and that the wording of the relevant provision has received considerable judicial interpretation over the years. The commentator notes that the impact of section 68 on other provincial legislation should be closely examined. I concur.

Quite apart from what other legislation might say on the matter, there is a question of whether section 68(2) reflects the appropriate balancing of the interests concerned. Section 68(2) is similar to the approach of existing legislation, but it is worth reiterating that TILA gives a debtor less extensive rights against an assignee than against the original creditor. An assignee incurs civil liability for a violation by the lender only if the violation was apparent on the face of the disclosure statement. Moreover, unless an assignee has knowledge to the contrary at the time of the assignment, written acknowledgment of receipt of a document by a person to whom the document was required to be delivered is conclusive proof of delivery.

Recommendation 27:

Additional consultation is desirable regarding the extent to which assignees should be burdened with the consequences of the assignor's non-compliance with CCDA.

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