Older Uniform Acts

Commentary on Cost of Credit Disclosure Act 1998



PART 4 - OPEN CREDIT

DIVISION 1 - OPEN CREDIT GENERALLY

28  Advertising for open credit


Subsections (1) and (2) reflect Proposal 10.2. Subsections (3)-(5) relate to Proposal 10.3 and are very similar to section 22, which applies to fixed credit. See commentary on section 22.

29 Contents of initial disclosure statement

This section implements Proposal 2.1.2, except that disclosures that are specific to credit cards are dealt with in section 35, information about required insurance (item (xiii) of Proposal 2.1.2) is dealt with in section 14, and brokerage fees (item (xiv) of the proposal) are dealt with in sections 12 and 13.

30 Statement of account

(1)(2) These subsections implement the first paragraph of Proposal 3.3.

(3) This implements item (vi) of Proposal 3.3. Subsection (3) requires the credit grantor to provide a facility for charge-free telephone inquiries; other provisions, such as section 31(1)(n), require the credit grantor to disclose this number in various documents. A credit grantor would not necessarily have to provide a dedicated toll-free line; it could comply with this requirement by accepting "collect" calls from customers.

31 Contents of statement of account

This implements the second paragraph of Proposal 3.3.

Paragraphs (1)(c) and (d) require disclosure of the details of each amount that is added to or subtracted from the outstanding balance (the total amount owing) during the statement period. Paragraphs (1)(g) and (h) require disclosure of the totals of all amounts disclosed under (c) and (d).

32 Description of transactions


This elaborates on what paragraph 31(c) means when it requires a "description" of each transaction. This section assumes that a major purpose of providing a borrower with a statement of account, especially for a credit card, is to allow the borrower to verify the transactions. So the statement should provide enough of a description of each transaction to allow the borrower to verify the transaction.

The phrase "made available to the borrower" warrants comment. An earlier draft of this provision said "given to the borrower." The phrase was changed because there was concern in some quarters that a credit grantor might have difficulty proving that the duplicate transaction record was actually "given" to the borrower at the time of the transaction, even if it was clearly made available to the borrower at that time.

DIVISION 2 - CREDIT CARDS

33 No unsolicited credit cards


This section addresses an issue that is not addressed by the DHA. However, it reflects the existing law in some Canadian jurisdictions. Individual jurisdictions must decide whether this section is in accordance with their policy objectives.

34 Application for credit card

(1) This implements the first item in the first paragraph of Proposal 6.1.

(2) This implements the second item in the first paragraph of Proposal 6.1

(3) This implements the second paragraph of Proposal 6.1.

(4) This reflects the last paragraph of Proposal 6.2.

(5) This is intended to make it clear that the requirements of this section are in addition to, not in substitution for, the requirements regarding initial disclosure statements for open credit. An application form could serve as the initial disclosure statement for a credit card agreement, in which case it would have to contain all the information required by sections 29 and 35. If the application form does not contain all of the disclosures required by sections 29 and 35, the credit grantor will have to provide a separate disclosure statement.

35 Additional disclosure for credit card


(1) This implements the first paragraph of Proposal 6.2.

(2) (3) These implement the last paragraph of Proposal 3.2, as qualified by the third paragraph of Proposal 4.1 (i.e., advance notice of change to floating rate not required).

36 Limitation of liability

(1)-(3) Subsections (1) - (3) implement the third paragraph of Proposal 6.2. The wording of the provision is adapted from section 30 of Alberta's Consumer Credit Transactions Act.

(4) The regulations contemplated by this subsection would deal with transactions in which a combination credit card / debit card is used as a debit card, as contemplated by the second paragraph of Proposal 6.2.

Cost of Credit Disclosure Act

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