Third Interim Report on Cost of Credit Disclosure Act 1994



At last years Conference the Uniform Law Section considered the Second Interim Report on Cost of Credit Disclosure Legislation. That report proposed the following work plan.

1. At the 1993 meeting the Uniform Law Section should establish a review committee to assist and give direction to the drafter. Consumer affairs and other provincial and federal government departments with responsibilities in this area should be represented on the review committee.

2. The drafter, taking into account comments on the February materials, should prepare the second draft of CCDA and PIA, with commentary, for consideration by the review committee. This draft should be in the hands of the review committee by the end of December, 1993.

3. The review committee should resolve any outstanding policy issues by the end of February, 1994, and should give appropriate directions to the drafter.

4. The drafter should prepare a final draft of CCDA and PIA, in accordance with the review committee's directions, by the end of March, 1994. The final draft should be reviewed and approved by the review committee by the end of April, 1994, at which time it would be distributed in the normal fashion to ULCC delegates.

5. The final draft of CCDA and PIA would be considered and, hopefully, adopted at the 1994 ULCC meeting.

As will be detailed in the next section, other events have affected the implementation of this work plan. Regarding the prospects for implementation, the impact of these events has been positive, but the same thing cannot be said about their impact on the ULCC's proposed timetable for adopting uniform legislation.


Cost of Credit Incorporated in Internal Trade Negotiations

Last summer federal and provincial governments initiated negotiations aimed at reducing barriers to trade within Canada, the objective being to reach a comprehensive internal trade agreement ("ITA") by June 30 of this year. The topics for negotiation were divided into various sectors, one of which was the consumer related measures sector ("CRMS"). Last fall I was informed that cost of credit disclosure legislation ("ccdl") had been included as one of the topics to be addressed by CRMS negotiators, although at that time there was no guarantee that ccdl would actually find its way into any trade agreement that might be reached. My understanding is that the topic was adopted largely because the CRMS negotiators were aware of and interested in taking advantage of the work already being done by the ULCC and ALRI.

Revised Draft of CCDA (Draft 3.1)

It was not until December of 1993 that we had received enough input on CCDA 2 to justify doing a revised draft. CCDA 3.1 was completed in February and circulated to members of an informal working group on cost of credit disclosure legislation.

Working Group Considers CCDA 3.1 and PIA 1

After learning of the inclusion of ccdl in the internal trade negotiations, John Gregory invited each jurisdiction's CRMS negotiator to join (or nominate a representative for) an informal cost of credit working group ("the working group"). The working group was eventually constituted and met in Toronto on March 1 and 2. A representative of every province except Prince Edward Island participated in the meeting either in-person or by telephone. The federal Department of Finance and Industry Canada (Consumer Affairs Bureau) also were represented at the meeting. John Gregory chaired the meeting and Peter Lown participated by telephone. The working group reviewed CCDA 3.1 in considerable detail and PIA 1 in less detail. There was a substantial measure of agreement on most of the issues addressed by CCDA 3.1, although there were a number of issues that proved to be controversial, or upon which the consensus of the group was that further consultation was required.

Before the working group meeting, we had hoped that the group might perform the functions envisioned for the "review committee" in item 3 of the work plan: to resolve all outstanding policy issues. However, although the meeting was extremely useful, it was clear that most jurisdictions regarded it as an opportunity to discuss the issues, and perhaps reach some tentative conclusions, rather than an opportunity to make final decisions on issues of policy.

Following the working group meeting, John Gregory and I drafted a two-part document that we thought reflected the consensus of the working group on a lot of issues. The first part of the document set out some general principles for harmonization of ccdl across Canada and the second part proposed more detailed principles for harmonization. The document was given to CRMS negotiators who met the following morning (March 3). We had hoped that negotiators could be persuaded to use the entire document as the framework for a possible agreement on cost of credit harmonization to be included in the ITA that was supposed to be reached by the end of June. However, several negotiators made it clear that the most that could be expected by the end of June was an "agreement to agree" on harmonization of ccdl in accordance with the general principles set out in the first part of the document.

Revised Draft of CCDA (Draft 3.2) and PIA (Draft 2.0)

Following the working group meeting, I prepared a modestly revised draft of the CCDA. The main purpose of this draft -- CCDA 3.2 -- was to make changes that reflected the consensus of the working group. I circulated Draft 3.2 and its accompanying Discussion Notes for comment towards the end of April. Prospective commentators were asked to provide comments by a "best before" date of May 20, but I have received comments well into June (and expect to receive additional comments between now and August). As of June 29, this latest round of consultation has produced written comments -- ranging from less than a page to about ten pages -- from the following individuals and organizations:

Working Group Members

  • Don Bence -- Alberta Municipal Affairs, Consumer Services Division
  • Luis Curras -- Quebec Office de la protection du consommateur
  • Linda Enns -- Saskatchewan Justice
  • John Gregory -- ULCC
  • Barbara Jones Gordon -- Nova Scotia Department of Housing and Consumer Affairs

Other Individuals and Organizations

  • E.R. Arditti -- Chrysler Canada
  • Jennifer Babe -- Miller Thomson, Barristers & Solicitors (Toronto)
  • Brigitte Goulard -- Trust Companies Association of Canada
  • J.B. Gregorovich -- Association of Canadian Financial Corporations
  • Linda Lusby -- Coordinator, Environmental Science Programs, Acadia University
  • Sue McGregor -- Human Ecology Department, Mount Saint Vincent University
  • Patricia Miquelon -- Federated Co-operatives Limited

A few of the comments -- primarily drafting suggestions of John Gregory -- were incorporated in a very minor redraft which I have labelled as CCDA 3.21. This is the version of CCDA that ULCC delegates will receive; for all intents and purposes it is identical to CCDA 3.2.

I turn now to PIA, which has received less attention than CCDA. PIA 1 was circulated with CCDA 2 commencing in February of 1993. I have received some comments on PIA 1, but not nearly as many as on CCDA. Therefore, the issues addressed (or raised) by PIA have not been aired as fully as those addressed by CCDA. We have not received the sort of detailed comments on PIA 1 that would allow me to do a redraft that would be a great improvement on the original. Nevertheless, at the working group meeting I told participants that I would do a second draft of PIA that, instead of setting out detailed "balance calculation rules" (as in PIA 1), would authorize regulations to that end. In May I prepared PIA 2.0. As I had indicated to the working group, the main change in PIA 2.0 from PIA 1 is that the detailed balance calculation method is now consigned to the regulations. PIA has not been circulated for comment.

Recent Internal Trade Developments

Since the working group meeting in March, I have received several versions of the portion of the draft ITA that deals with harmonization of ccdl. For our purposes, the crucial portion of the draft ITA is paragraphs 7-10 of Annex 807.1, which is reproduced as Appendix B. Paragraphs 7-9 are descended from the first ("general principles") part of the document that John Gregory and I drafted after the working group meeting in early March. Paragraph 10 was not part of the document prepared after the working group meeting. Early versions of Annex 807.1 referred to 199X as the dates for agreement and implementation, and it was not until some time in May that actual dates were inserted, and even then they were in square brackets. Late in May John wrote to the CRMS co-chairs suggesting that it should be possible to reach agreement on the details of ccdl well before January 1, 1996, and suggesting that January 1, 1995 would be a more appropriate target date. Apparently, the CRMS negotiators discussed this further amongst themselves and have decided that they would be more comfortable with their originally proposed date of January 1, 1996 for reaching agreement on the details of harmonized ccdl.

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