Third Interim Report on Cost of Credit Disclosure Act 1994

 

Appendix B

Extract from Internal Trade Agreement

3. Cost of Credit Disclosure

(a) Parties agree to the implementation of harmonized cost of credit disclosure legislation across Canada. The objectives of such legislation include:

  • ensuring that consumers receive fair, accurate, comparable information about the cost of credit when they are making credit-purchasing decisions so they can use that information to get the most economical source and form of credit for their needs;
  • with respect to non-mortgage credit, preserving and reinforcing the current policy that consumers are entitled to pay off their loans at any time and, if they do so, to pay only those finance charges that have been earned at the time they pay off the loan;
  • ensuring disclosure requirements are as clear and as simple as possible, given the inherent complexity of many of the disclosure issues that arise in relation to any form of credit.

(b) Parties agree that uniform cost of credit disclosure legislation will apply to all forms of consumer credit including:

  • fixed credit (eg. loans for a fixed sum to be repaid in instalments)
  • open credit (eg. lines of credit or credit cards)
  • loans secured by mortgage of real property
  • supplier credit (eg. conditional sale agreements)
  • long-term leases of consumer goods.

Relevant federal legislation includes disclosure provisions in the Bank Act and the cost of borrowing regulations, and equivalent legislation for other federally incorporated financial institutions.

Agreement between the Parties on the final elements of cost of credit harmonization will be completed by [January 1, 1996 with implementation of such measures by January 1, 1997.][28]

Part 5 -- Leases of Goods

Section 47 Definitions

"cash value" [clause (a)]

As mentioned in Part B, the definition of cash value is problematic in the case of lease transactions. The following change will not necessarily address all of the problems, but is consistent with the change to the definition of "cash value" discussed earlier in relation to section 1.

Recommendation 23:

Subclause (ii) of the definition should be revised to read:

(ii) in any other case, means their agreed cash value, not exceeding the merchant's reasonable estimate of the amount that a typical cash customer would pay to buy the goods.

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