NLR 100/23 - High-Cost Credit Product Regulations under the Consumer Protection and Business Practices Act

NEWFOUNDLAND AND LABRADOR REGULATION 100/23 High-Cost Credit Product Regulations under the Consumer Protection and Business Practices Act (O.C. 2023-283) Amended by: 17/24 NEWFOUNDLAND AND LABRADOR REGULATION 100/23 High-Cost Credit Product Regulations under the Consumer Protection and Business Practices Act (O.C. 2023-283) (Filed December 21, 2023) Under the authority of section 83.23 of the Consumer Protection and Business Practices Act, the Lieutenant-Governor in Council makes the following regulations. Dated at St. John’s, December 20, 2023. Krista Quinlan Clerk of the Executive Council REGULATIONS Analysis 1. Short title 2. Definitions 3. High-cost credit product definition 4. Application 5. Prohibited practices 6. Time period 7. Borrower review of matters in high-cost credit agreement 8. Cash cards 9. Display of licence 10. Signs 11. High-cost credit agreement by internet 12. High –cost credit agreement by telephone 13. Commencement Short title 1. These regulations may be cited as the High-Cost Credit Product Regulations . 100/23 s1 Back to Top Definitions 2. In these regulations, (a) "Act" means the Consumer Protection and Business Practices Act ; and (b) "licence" means a licence issued to a high-cost credit grantor under subsection 86(4) of the Act to carry on a high-cost credit business. 100/23 s2 Back to Top High-cost credit product definition 3. (1) For the purposes of subparagraphs 83.12( i )( i ) to (iii) of the Act, a high-cost credit product is (a) a fixed credit product or a lease ( i ) that exceeds the APR prescribed in subsection (2) on the date of the high-cost credit agreement, and (ii) in which the credit is extended through the fixed credit product or lease primarily for a personal, family or household purpose; or (b) an open credit product ( i ) that exceeds the annual interest rate prescribed in paragraph (3)(b) on the date of the high-cost credit agreement, and (ii) in which the credit is extended through the open credit product for a personal, family or household purpose. (2) F or the purposes of subparagraphs 83.12( i )( i ) and (iii) of the Act, the prescribed APR is the rate obtained by increasing the Bank of Canada rate by 22 percentage points. (3) For the purposes of subparagraph 83.12( i )(ii) of the Act, (a) the annual interest rate is calculated as follows: Annual interest rate = interest rate X number of periods period year (b) the prescribed annual interest rate is the rate obtained by increasing the Bank of Canada rate by 22 percentage points. (4) For the purposes of subsection (2) and paragraph (3)(b), the Bank of Canada rate is the rate in force on the expiry of a 2-day period following the announcement of the rate by the Bank of Canada. 100/23 s3 Back to Top Application 4. The following high-cost credit grantors are excluded from Part VII.2 of the Act: (a) a bank to which the Bank Act (Canada) applies; and (b) a credit union incorporated or continued under the Credit Union Act, 2009 . 100/23 s4 Back to Top Prohibited practices 5. (1) A high-cost credit grantor shall not (a) charge an amount to a borrower in addition to the fees provided for in the high-cost credit agreement between the borrower and the high-cost credit grantor in relation to the high-cost credit product; (b) issue a new high-cost credit product to a borrower who already has a high-cost credit product issued by the high-cost credit grantor; (c) m ake withdrawals from a borrower’s account without the express consent of the borrower; (d) fail to include the name of the high-cost credit grantor as shown on its licence in all written correspondence with the borrower; (e) fail to mention the name of the high-cost credit grantor as shown on its licence when the high-cost credit grantor contacts the borrower by telephone or in person; (f) contact a person by telephone or in person f or the purpose of collecting or attempting to collect a debt except between 8 a.m. and 9 p.m. local time of the location of the recipient of the call; (g) directly or indirectly threaten or state an intention to proceed with an action for which there is no lawful authority; (h) contact or attempt to contact the borrower, a member of the borrower's household, a relative of the borrower, the borrower's employer or a neighbour, friend or acquaintance of the borrower in such a manner as to constitute harassment, including ( i ) the use of threatening, profane, intimidating or coercive language, (ii) the use of undue, excessive or unreasonable pressure, or (iii) the use of telephone, email or other methods of contact, other than traditional mail, to call or send messages excessively; ( i ) give a person, directly or indirectly, by implication or otherwise, false, misleading or deceptive information, including references to the police, a law firm, prison, credit history, court proceedings, a lien or garnishment; (j) use, without lawful authority, a summons, notice, demand or other document, expressed in language of the general style or purport of a form used in a court of the province, or printed or written or in the general appearance or format of that form; (k) contact a borrower's spouse, cohabiting partner, relative, neighbour, friend or acquaintance other than to obtain the borrower's residential address, personal telephone number or employment telephone number; (l) contact the borrower's employer other than to confirm the borrower's employment status, business title, the address of the business or the date of the next payday; (m) contact a borrower at the borrower's place of employment where the borrower ( i ) requests the high-cost credit grantor not to contact the borrower there, (ii) makes reasonable arrangements to discuss the high-cost credit product with the high-cost credit grantor, and (iii) discusses the high-cost credit product with the high-cost credit grantor in accordance with those arrangements; (n) communicate information about the high-cost credit product or the existence of the high-cost credit product to a person except the borrower unless the borrower has expressly consented otherwise; (o) publish or threaten to publish a borrower's failure to pay; (p) give false, misleading or deceptive information in advertisements, solicitations or negotiations with respect to a high-cost credit product; (q) require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging or providing a high-cost credit product; (r) enter into a high-cost credit agreement that does not comply with the Act and these regulations; (s) discount the principal amount of a high-cost credit product; (t) require, request or accept a cheque from the borrower unless it is payable to the high-cost credit grantor; (u) require, request or accept an undated cheque from a borrower; (v) s tate or imply that its licence is an endorsement or approval of the high-cost credit grantor by the government of the province; (w) require, request or accept a post-dated cheque, pre-authorized debit or future payment of a similar nature for an amount exceeding the amount to repay the high-cost credit product by the due date; or (x) require, request or accept information that would give the high-cost credit grantor direct access to a borrower's bank account, except for pre-authorization for repayment of a specific high-cost credit product. (2) Notwithstanding paragraphs (1)(n) and (q), a high-cost credit grantor may (a) communicate information about the high-cost credit product or the existence of the high-cost credit product to a credit reporting agency; and (b) require, request or accept consent from a borrower to use or disclose the borrower’s personal information for the purposes of providing credit information of the borrower relating to the high-cost credit product to a credit reporting agency. 100/23 s5 ; 17/24 s1 Back to Top Time period 6. For the purposes of subparagraph 83.17(2)(l)(ii) of the Act, the prescribed time period is one year. 100/23 s6 Back to Top Borrower review of matters in high-cost credit agreement 7. For the purposes of paragraph 83.17(4)(a) of the Act, a high-cost credit grantor shall (a) review the matters referred to in paragraphs 83.17(2)(e), (f), (g), (k), (l), (s), and (y) with a borrower before the borrower signs a high-cost credit agreement; and (b) ensure that the borrower initials the provisions in the high-cost credit agreement relating to the matters referred to in paragraph (a). 100/23 s7 Back to Top Cash cards 8. (1) For the purpose of paragraph 83.19(1)(a) of the Act, a borrower is entitled to be paid in cash the amount of credit remaining on a cash card where the balance remaining on the cash card is less than $25. (2) Where a delinquent borrower has a balance of credit remaining on an expired cash card, the high-cost credit grantor may recover from the cash card only the amount due on the delinquent high-cost credit product and shall return the remaining balance to the borrower immediately on demand by the borrower or by the director. (3) The high-cost credit grantor shall issue a receipt to the borrower for money recovered from a cash card under subsection (2 ), and shall inform the borrower of the remaining balance on the cash card and how the balance may be refunded. 100/23 s8 Back to Top Display of licence 9. A high-cost credit grantor shall prominently display its licence in the location for which it is issued. 100/23 s9 Back to Top Signs 10. (1) A high-cost credit grantor shall prominently display signs at each location at which the high-cost credit grantor offers, arranges or provides high-cost credit products. (2) A sign required under subsection (1) shall (a) measure not less than 61 cm in width and 76 cm in height; and (b) be visible to borrowers immediately on entering the location. (3) For each type of high-cost credit product offered, arranged or provided at that location, the signs required under subsection (1) shall (a) clearly state that the product is a high-cost credit product; (b) separately list each component of the cost of credit for the high-cost credit product payable to the high-cost credit grantor or a third party, including ( i ) the interest rate, and (ii) each fee, charge, penalty or other amount, including any (A) brokerage fee, (B) c redit assessment or approval fee, (C) administrative or processing fee, (D) advance or draw fee, (E) other fee or charge for accessing the funds, including any account set-up fee, transfer fee and cash card fee, (F) charge or penalty for exceeding the credit limit, and (G) default charge or penalty; (c) clearly state for each component in paragraph (b) the amount and how often it is or may be charged, required or accepted by the credit grantor or a third party; and (d) clearly state that the borrower has the right to cancel a high-cost credit agreement in accordance with section 83.16 of the Act. 100/23 s10 Back to Top High-cost credit agreement by internet 11. (1) Where a high-cost credit grantor engages in high-cost credit business by means of the internet, the high-cost credit grantor shall prominently display its name as shown on its licence , its licence number and the licence expiry date at or near the top of the introductory page of the website or mobile application. (2) A high-cost credit grantor referred to in subsection (1) shall (a) post the information referred to in subsection 10(3) in a visible location at or near the top of the introductory page or screen; (b) use a white background and a purple border on the user interface; and (c) display the required information in a contrasting font colour. (3) Before a borrower enters into an high-cost credit agreement by means of the internet, the high-cost credit grantor shall ensure that its website or mobile application is designed in a manner that (a) indicates in a clear, understandable and prominent manner that the borrower's action or actions will result in the entering into of a high-cost credit agreement with the credit grantor; and (b) makes the high-cost credit agreement accessible to the borrower so that the borrower is able to acknowledge and accept the terms and conditions of the high-cost credit agreement. 100/23 s11 Back to Top High-cost credit agreement by telephone 12. (1) Where a high-cost credit grantor engages in high-cost credit business by means of the telephone, the high-cost credit grantor shall advise the borrower of the high-cost credit grantor’s (a) name as shown on its licence; (b) licence number; and (c) licence expiry date. (2) Before a borrower enters into a high-cost credit agreement by means of the telephone, the high-cost credit grantor shall (a) advise the borrower that the borrower's action or actions will result in the entering into of a high-cost credit agreement with the high-cost credit grantor; (b) review the matters referred to in paragraphs 83.17(2)(e), (f), (g), (k), (l), (s), and (y) with a borrower; and (c) ensure that the borrower verbally acknowledges the provisions in the high-cost credit agreement relating to the matters referred to in paragraph (b). 100/23 s12 Back to Top Commencement 13. These regulations come into force on the day that An Act to Amend the Consumer Protection and Business Practices Act , SNL2022 c28, comes into force. 100/23 s13