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3rd Session, 40th Legislature

This HTML version is provided for ease of use and is based on the bilingual version that was distributed in the Legislature after First Reading.

Bill 34

THE CONSUMER PROTECTION AMENDMENT ACT (HIGH-COST CREDIT PRODUCTS)


  Bilingual version (PDF) Explanatory Note

(Assented to                                         )

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. C200 amended

1           The Consumer Protection Act is amended by this Act.

2           The definition "product" in subsection 1(1) is amended by adding "(except in Part XXV)" after "include".

3           Subsection 138(1) is amended in the part before clause (a) by striking out "if" and substituting "offered, arranged or provided to a borrower in Manitoba if".

4           The following is added after section 138 and before the centred heading that follows it:

Interpretation re broker's assistance

138.1       To avoid doubt, a broker who assists a borrower in relation to a payday loan is a payday lender who arranges that loan.

5           Subsection 141(4) is amended in the part before clause (a) by striking out "before it would otherwise cease to be valid under that subsection" and substituting "in accordance with the regulations and at the prescribed time,".

6           Subsection 142(1) is amended

(a) in subclause (a)(i), by striking out "or The Business Practices Act" and substituting ", The Business Practices Act, The Personal Investigations Act or a prescribed Act";

(b) in subclause (d)(ii), by striking out "jurisdiction" and substituting "jurisdiction in or outside Canada";

(c) in clause (d.1), by striking out "has" and substituting "has contravened or"; and

(d) by adding the following after clause (d.1):

(d.2) the applicant has contravened or failed to comply with any provision of this Act;

(d.3) the applicant has contravened or failed to comply with any order issued by the director under this Act or The Business Practices Act;

7           Subsection 143(1) is amended

(a) in clause (c), by striking out "with this" and substituting "with any provision of this"; and

(b) in clause (c.1) by adding "under section 135.6 or 135.12 issued in respect of the payday lender's licence" after "order".

8           Subsection 148(3) is amended

(a) by striking out "to the borrower" and substituting "to a borrower"; and

(b) by renumbering it as subsection 138(3).

9           Subsection 149(3) is amended by striking out "or employee" and substituting ", employee or agent".

10          Sections 161.6 and 161.7 and the centred heading before them are repealed.

11          Subsection 163(1) is amended

(a) in clause (c.1), by striking out "their activities" and substituting "or prohibiting activities and practices";

(b) in clause (g.1) in the part before subclause (i), by striking out "including" and substituting "and other means by which a borrower may access funds under a payday loan, including";

(c) in clause (p), by striking out everything after "including" and substituting "modifying or limiting any provision of Part XII and restricting or prohibiting activities that are not restricted or prohibited under that Part;";

(d) by adding the following after clause (p):

(p.1) respecting information to be posted on a payday lender's website;

(p.2) modifying or limiting the application of Part II and the regulations under that Part to payday loans, payday lenders and payday loan agreements, including

(i) modifying or limiting any definition in subsection 1(1), or clarifying its application, for the purposes of this Part, and

(ii) modifying or limiting any provision of Part II, or clarifying its application, for the purposes of this Part;

(e) by repealing clause (q).

12          The following is added as Part XXV:

PART XXV

HIGH-COST CREDIT PRODUCTS

INTERPRETATION AND APPLICATION

Definitions

237         The following definitions apply in this Part.

"applicant" means an applicant for a licence or for renewal of a licence under this Part. (« demandeur »)

"high-cost credit agreement" means an agreement, arrangement or transaction under which credit is, or is to be, extended by way of a high-cost credit product, including an agreement to renew, amend or extend an agreement, arrangement or transaction. (« contrat de crédit à coût élevé »)

"high-cost credit grantor" means a person who offers, arranges or provides a high-cost credit product. (« fournisseur de crédit à coût élevé »)

"high-cost credit product" means

(a) a loan of money, or a loan of money that may occur in the future, that meets the prescribed criteria;

(b) a line of credit, or a credit product of a similar nature to a line of credit, that meets the prescribed criteria; or

(c) a prescribed product;

through which credit is extended to an individual primarily for a personal, family or household purpose, but does not include

(d) a payday loan regulated under Part XVIII;

(e) a mortgage; or

(f) a prescribed product. (« produit de crédit à coût élevé »)

"licence" means a licence issued under this Part, unless the context requires otherwise. (« licence »)

Application

238(1)      This Part applies to high-cost credit products offered, arranged or provided to borrowers in Manitoba.

Non-application

238(2)      This Part does not apply to banks, credit unions or prescribed persons.

Interpretation re broker's assistance

239         To avoid doubt, a broker who assists a borrower in relation to a high-cost credit product is a high-cost credit grantor who arranges that product.

Interpretation of ambiguous statement

240         If a provision or statement in a high-cost credit agreement or in any related document provided to a borrower is ambiguous, it must be construed in favour of the borrower.

LICENSING

Licence required

241(1)      No person shall offer, arrange or provide a high-cost credit product except under the authority of a licence issued to the person or the person's employer.

Use of name

241(2)      No high-cost credit grantor shall offer, arrange or provide a high-cost credit product under a business name or style that differs from the business name or style specified in the credit grantor's licence.

Application for licence or renewal of licence

242(1)      A person may apply, in a form approved by the director, for

(a) a licence authorizing the person to offer, arrange or provide the high-cost credit products specified in the licence at a location specified in the licence; or

(b) a renewal of a licence.

More than one licence required

242(2)      A person who wishes to offer, arrange or provide high-cost credit products at more than one location must apply for a separate licence for each location.

Applicant to provide information

242(3)      When applying for a licence or a renewal of a licence, the applicant must provide

(a) a completed application form;

(b) a detailed description of

(i) each type of proposed high-cost credit product to be offered, arranged or provided by the applicant, and

(ii) each type of the applicant's proposed high-cost credit agreements;

(c) the information required by the regulations; and

(d) any additional information requested by the director.

Licence fee

242(4)      Before a licence is issued or renewed by the director, the applicant must pay the licence or renewal fee specified in the regulations.

Licence not transferable or assignable

243(1)      A licence is not transferable or assignable.

Terms and conditions of licence

243(2)      The director, if he or she considers it in the public interest to do so, may impose terms or conditions on a licence at the time of issuing or renewing the licence, or at any other time by written notice to the holder of the licence. A licence is also subject to any terms or conditions imposed by regulation.

Duration of licence

243(3)      A licence ceases to be valid one year after the day it is issued or, if it is renewed, on the next anniversary date of its issuance, unless it is further renewed.

Validity during consideration of renewal application

243(4)      Despite subsection (3), if a high-cost credit grantor applies for a renewal of his or her licence in accordance with the regulations and at the prescribed time, the licence continues to be valid until

(a) it is renewed; or

(b) the credit grantor is served with a copy of the director's decision not to renew it.

Refusal to issue licence

244(1)      The director may refuse to issue a licence to an applicant if

(a) the applicant has been convicted of

(i) an offence under this Act, The Business Practices Act, The Personal Investigations Act or a prescribed Act,

(ii) an offence under the Criminal Code (Canada), or

(iii) any other offence under the laws of a jurisdiction in or outside Canada that, in the director's opinion, involves a dishonest action or intent;

(b) the applicant is an undischarged bankrupt;

(c) the applicant provides incomplete, false, misleading or inaccurate information in support of the application;

(d) a licence issued to the applicant

(i) under this Act, or

(ii) by an authority responsible for issuing licences with respect to the lending of money, or the extension of credit, in any jurisdiction in or outside Canada,

is suspended or has been cancelled, or the applicant has applied for a renewal of such a licence and the renewal has been refused;

(e) the applicant has contravened or failed to comply with any provision of this Act;

(f) the applicant has contravened or failed to comply with any order issued by the director under this Act or The Business Practices Act;

(g) the applicant has contravened or failed to comply with any order, direction or other requirement issued or imposed by an authority responsible for issuing licences with respect to the lending of money, or the extension of credit, in any jurisdiction in or outside Canada;

(h) the applicant fails to meet any qualification or satisfy any requirement of this Part or the regulations;

(i) any proposed high-cost credit agreement for a high-cost credit product to be offered, arranged or provided by the applicant would, if entered into, contravene subsection 347(1) of the Criminal Code (Canada) or any other law about interest;

(j) the director has reason to believe, based on past conduct, that the applicant will not carry on business according to law or with integrity or honesty; or

(k) in the director's opinion, it is not in the public interest to issue a licence to the applicant.

Where applicant is a corporation or partnership

244(2)      The director may refuse to issue a licence to

(a) a corporation, if a director or officer of the corporation could be refused a licence under subsection (1); or

(b) a partnership, if a member of the partnership could be refused a licence under subsection (1).

Reasons for refusal

244(3)      The director must give written reasons for a decision to refuse to issue a licence.

Refusal to renew, cancellation or suspension

245(1)      Subject to subsection (2), the director may refuse to renew, or may cancel or suspend, a high-cost credit grantor's licence

(a) for any reason for which the director may refuse to issue a licence under section 244;

(b) if any high-cost credit agreement for a high-cost credit product offered, arranged or provided by the high-cost credit grantor contravenes subsection 347(1) of the Criminal Code (Canada) or any other law about interest;

(c) if the credit grantor contravenes or fails to comply with any provision of this Act;

(d) if the credit grantor fails to provide information required by the director or the regulations, or provides incomplete, false, misleading or inaccurate information to the director;

(e) if the credit grantor contravenes or fails to comply with a director's order under section 135.6 or 135.12 issued in respect of the high-cost credit grantor's licence; or

(f) if the credit grantor contravenes or fails to comply with any term or condition of the licence.

Notice required

245(2)      Before refusing to renew or cancelling or suspending a licence, the director must notify the high-cost credit grantor, in writing,

(a) that the director intends to refuse to renew the licence, or to cancel or suspend it, and why; and

(b) that the credit grantor may, within 14 days after being served with the notice,

(i) make a written submission to the director as to why the renewal should not be refused or the licence should not be cancelled or suspended, or

(ii) contact the director to arrange a date and time for a hearing before the director.

Extension of time

245(3)      The director may extend the 14-day period referred to in clause (2)(b).

Where no submission made or hearing arranged

245(4)      If the high-cost credit grantor does not make a written submission or arrange for and attend a hearing under clause (2)(b), the director may take the action stated in the notice.

Decision after submission or hearing

245(5)      After considering a written submission or holding a hearing, the director may refuse to renew the licence or may cancel or suspend the licence.

When cancellation or suspension becomes effective

245(6)      A decision to cancel or suspend a high-cost credit grantor's licence takes effect when notice of the decision is served on the credit grantor, or on the date specified in the decision, whichever is later.

Reasons for decision

245(7)      The director must give written reasons for a decision to refuse to renew, or to cancel or suspend, a licence.

Appeal

246(1)      A decision of the director to not issue or renew a licence, or to cancel or suspend a licence, may be appealed to the court by the person who applied for or held the licence.

How to appeal

246(2)      An appeal to the court must be made by filing an application with the court within 14 days after a copy of the director's decision is served on the person appealing. As soon as practicable after filing the application, the person appealing must serve a copy of the application on the director.

Court's decision

246(3)      The court may

(a) confirm the director's decision; or

(b) allow the appeal on any terms and conditions the court considers appropriate.

The court may make any order as to costs that the court considers appropriate.

Director may apply for injunction

247(1)      The director may apply to the court for an injunction restraining a person from offering, arranging or providing high-cost credit products without a licence.

Court may grant injunction

247(2)      The court may grant the injunction against the person if it is satisfied that the person offered, arranged or provided a high-cost credit product without a licence or there is reason to believe that the person will do so.

Giving of notices, etc. by the director

248(1)      A notice, decision or other document to be given to or served on a person by the director under this Part must be given or served

(a) by delivering a copy of it to the person or to an officer or employee of the person;

(b) by sending a copy of it by registered mail, or by another service that provides the sender with proof of delivery, to the person at the last address known to the director for the person or the person's business; or

(c) in any other prescribed manner.

Deemed receipt

248(2)      A notice, decision or other document sent to a person in accordance with clause (1)(b) is deemed to have been received on the date shown on the confirmation of delivery obtained from the Canada Post Corporation or the other service.

Actual notice is sufficient

248(3)      Despite the fact that a notice, decision or other document is not given or served in accordance with this section, it is sufficiently given or served if it actually came to the attention of the person for whom it was intended within the time for giving or serving it under this Part.

DISCLOSING INFORMATION

Requirement to give borrower information

249(1)      For each high-cost credit product offered, arranged or provided, a high-cost credit grantor must give to the borrower a document that

(a) states that the product is a high-cost credit product; and

(b) provides the information under subsection (2).

Information to be provided in document

249(2)      The following information must be separately listed and prominently displayed in the document:

The high-cost credit product

1.  The type of high-cost credit product.

2.  The amount of funds available to the borrower.

3.  Each method or means of accessing the funds and the cost of each one and, if applicable, how to make an initial advance or draw and any subsequent advance or draw on the funds.

The cost of the high-cost credit product

4.  Depending on the type of high-cost credit product,

(a) the total cost of credit expressed in a dollar amount, or

(b) the total cost of credit expressed in a dollar amount based on the maximum amount available for draw if repaid within the prescribed time period.

5.  The interest rate, how interest is calculated and compounded, and how, when and why the interest rate will or may change.

6.  Each fee, charge, penalty or other amount that will or may be payable by the borrower to the high-cost credit grantor or a third party, including

(a) any brokerage fee,

(b) any credit assessment or approval fee,

(c) any administrative or processing fee,

(d) any advance or draw fee,

(e) any other fee or charge for accessing the funds, including any account set-up fee, transfer fee and cash card fee,

(f) any charge or penalty for exceeding the credit limit,

(g) any default charge or penalty,

(h) any prescribed fee, charge, penalty or other amount,

and how, how often, when and why each one is or may be payable, how much is or may be payable, and what will or may happen if the borrower fails to pay it.

7.  How each payment will be applied to the accumulated cost of credit and principal.

The high-cost credit agreement

8.  What collateral or security will or may be required from the borrower.

9.  When a grace period will or may apply, and what conditions, if any, the borrower must meet to benefit from it. 

10. What will or may happen if the borrower fails to make a payment when it becomes due, including

(a) what default charge or penalty will or may be payable by the borrower,

(b) how and when the terms and conditions of the high-cost credit agreement will or may be affected by the missed payment,

(c) what will or may happen to any collateral or security.

11. How, when and in what circumstances the high-cost credit grantor will or may demand payment in full from the borrower.

12. How, when and in what circumstances the borrower may cancel the high-cost credit agreement.

13. How, when and in what circumstances the high-cost credit grantor will or may cancel the high-cost credit agreement.

14. Each good or service that must also be purchased by the borrower, how to purchase it, why it is required and how much it will cost.

15. Each optional good or service that the borrower may choose to purchase, how much it will cost, and how to decline it, accept it and cancel it.

The borrower's rights

16. The borrower's right to receive

(a) the document,

(b) a copy of the high-cost credit agreement before entering into it,

(c) a copy of the completed high-cost credit agreement after entering into it,

and the right to have reasonable time to review each document or copy and ask questions.

17. The borrower's right to cancel the high-cost credit agreement as provided in section 252, and how to exercise the right.

18. The borrower's right to make full or partial prepayment, and how to exercise the right.

Other information

19. The date the document is given to the borrower.

20. Any other information required by the regulations.

Additional requirements

249(3)      The information provided for the purpose of this section must

(a) be accurate and up to date;

(b) be expressed clearly and understandably; and

(c) meet any other requirements set out in the regulations.

Prescribed form must be used

249(4)      Subject to subsection (5), the high-cost credit grantor must use the prescribed form to provide the information required under this section.

Approved form may be used if no prescribed form

249(5)      If there is no prescribed form, the high-cost credit grantor may use its own form to provide the information required under this section, but only if the director approves the form.

When document must be given

249(6)      The high-cost credit grantor must give the document to the borrower

(a) before the borrower

(i) enters into the agreement, or

(ii) makes any payment in connection with it,

whichever occurs first; and

(b) with reasonable time for the borrower to review the document and ask questions about the high-cost credit product, the high-cost credit grantor and the high-cost credit agreement.

PROVIDING AGREEMENTS

Reasonable time to review agreement before signing

250(1)      A high-cost credit grantor must give a borrower, at no cost, a copy of the high-cost credit agreement with reasonable time to review it before the borrower enters into the agreement.

Copy of entire credit agreement, other documents

250(2)      Immediately after entering into the high-cost credit agreement, a high-cost credit grantor must give the borrower, at no cost,

(a) a copy of each document that comprises the entire agreement; and

(b) any other documents respecting

(i) the goods or services that the borrower was required to purchase, and

(ii) the optional goods or services that the borrower accepted or declined.

POSTING SIGNS

Requirement to post signs

251(1)      A high-cost credit grantor must post signs at each location at which the credit grantor offers, arranges or provides high-cost credit products.

Signs to be posted prominently

251(2)      The signs must be prominently posted at the location in accordance with the regulations.

Information to be posted on signs

251(3)      For each type of high-cost credit product offered, arranged or provided at that location, the signs must

(a) clearly state that the product is a high-cost credit product;

(b) separately list each component of the cost of credit for that 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

(A) any brokerage fee,

(B) any credit assessment or approval fee,

(C) any administrative or processing fee,

(D) any advance or draw fee,

(E) any other fee or charge for accessing the funds, including any account set-up fee, transfer fee and cash card fee,

(F) any charge or penalty for exceeding the credit limit,

(G) any default charge or penalty, and

(H) any prescribed fee, charge, penalty or other amount,

and for each listed component clearly state the amount and how often it is or may be charged, required or accepted by the credit grantor or a third party;

(c) clearly state that the borrower has the right to cancel a high-cost credit agreement within 48 hours as permitted under section 252;

(d) include any other prescribed statements and provide any other information required by the regulations; and

(e) meet any other requirements set out in the regulations.

CANCELLING AGREEMENT

Borrower may cancel within 48 hours

252(1)      A borrower may cancel a high-cost credit agreement within 48 hours — excluding Sundays and other holidays — after entering into the agreement.

Additional cancellation rights

252(2)      In addition to having a cancellation right under subsection (1), a borrower may cancel a high-cost credit agreement at any time if

(a) the high-cost credit grantor did not notify the borrower of his or her right under subsection (1) to cancel the agreement; or

(b) the notice of the right to cancel under subsection (1) does not meet the requirements under section 249.

Officers, employees or agents included

252(3)      In subsection (4), "high-cost credit grantor" includes an officer, employee or agent of the credit grantor at the location at which the high-cost credit product was arranged or provided.

Procedure for cancelling agreement

252(4)      To cancel a high-cost credit agreement under subsection (1) or (2), the borrower must

(a) give written notice of the cancellation to the high-cost credit grantor; and

(b) repay — by cash, certified cheque, money order or in a prescribed manner or by a prescribed means — the outstanding balance of all amounts advanced or drawn, less any amount of the cost of credit that was

(i) paid by or on behalf of the borrower, or

(ii) deducted or withheld from an advance of or draw on the high-cost credit product.

Borrower to be given receipt

252(5)      Upon the cancellation of a high-cost credit agreement under this section, the high-cost credit grantor must immediately give the borrower a receipt in the prescribed form specifying the amount the borrower paid or returned to the credit grantor upon cancelling the agreement.

Effect of cancellation

252(6)      Subject to the regulations, the cancellation of a high-cost credit agreement in accordance with this section extinguishes every liability and obligation of the borrower under, or related to, the credit agreement.

No fee on cancellation

252(7)      No high-cost credit grantor shall

(a) charge or require or accept the payment of; or

(b) arrange for or permit any other person to charge or to require or accept the payment of;

any fee, charge, penalty or other amount or any consideration for, or as a consequence of, the cancellation of a high-cost credit agreement under this section.

Refund to borrower on cancellation

252(8)      Upon cancellation in accordance with this section, the high-cost credit grantor must immediately reimburse the borrower, in cash, for the amount paid, and the amount of the value of any consideration given, by or on behalf of the borrower, as the cost of credit for the high-cost credit product, if those amounts exceed the amount, if any, retained by the borrower and not repaid under clause (4)(b).

Cancellation rights in addition to other rights

252(9)      The cancellation rights under this section are in addition to, and do not affect, any other right or remedy the borrower has under the high-cost credit agreement or at law.

PREPAYMENT

No fee on prepayment of outstanding balance

253(1)      No high-cost credit grantor shall

(a) charge or require or accept the payment of; or

(b) arrange for or permit any other person to charge or require or accept the payment of;

any fee, charge, penalty or other amount or consideration for, or as a consequence of, the prepayment of the outstanding balance under a high-cost credit agreement.

No fee on partial prepayment of outstanding balance

253(2)      No high-cost credit grantor shall

(a) charge or require or accept the payment of; or

(b) arrange for or permit any other person to charge or require or accept the payment of;

any fee, charge, penalty or other amount or consideration for, or as a consequence of, the prepayment, on any scheduled payment date or at least monthly, of a portion of the outstanding balance under a high-cost credit agreement.

RECORDS

Records to be kept by high-cost credit grantor

254         A high-cost credit grantor must maintain records in accordance with the regulations, including

(a) records of all high-cost credit products that it offers, arranges or provides; and

(b) all high-cost credit agreements that it enters into.

REGULATIONS

Regulations

255(1)      The Lieutenant Governor in Council may make regulations

Application

(a) for the purpose of the definition "high-cost credit grantor", prescribing persons;

(b) for the purposes of the definition "high-cost credit product",

(i) prescribing criteria,

(ii) prescribing credit products for the purpose of clause (c) of the definition, and

(iii) prescribing credit products that are not included in the definition;

(c) exempting credit grantors, credit products, credit agreements or persons from the application of this Part or any provision of it;

Licensing

(d) respecting licences and renewals of licences, including

(i) the form and content of applications for licences and renewals,

(ii) qualifications of, and requirements to be met by, applicants for licences and renewals,

(iii) information and records to be provided to the director by applicants for licences and renewals,

(iv) licence fees and renewal fees,

(v) the form of a licence, and

(vi) the terms and conditions of a licence;

(e) respecting security to be provided by a licence holder, including

(i) requiring a licence holder to provide a bond or other security,

(ii) prescribing the terms, conditions and amount of a bond or other security, and

(iii) respecting the forfeiture of a bond or other security, and disposition of proceeds of forfeiture;

(f) for the purpose of section 248, respecting the manner of giving or serving notices, decisions and other documents;

High-Cost Credit Grantors

(g) for the purpose of protecting borrowers, prescribing responsibilities of high-cost credit grantors, and governing or prohibiting activities and practices, including activities and practices related to defaults, tied selling, discounting, and the entering into of concurrent high-cost credit agreements;

(h) respecting collection practices of high-cost credit grantors, including modifying or limiting any provision of Part XII and restricting or prohibiting activities that are not restricted or prohibited under that Part;

(i) respecting information disclosure, including

(i) for the purpose of section 249, specifying information that a high-cost credit grantor must give a borrower, respecting other requirements to be met by high-cost credit grantors, and prescribing forms,

(ii) respecting information disclosure for extensions or renewals of, and amendments to, high-cost credit agreements, and

(iii) respecting other documents and information that must be given to a borrower in addition to those required under section 249;

(j) for the purpose of section 251, respecting the posting of signs and the form and content of information to be placed on the signs, prescribing statements and specifying information to be posted on the signs, and respecting other requirements to be met by high-cost credit grantors;

(k) respecting advertising in relation to high-cost credit products;

(l) respecting information to be posted on the website of a high-cost credit grantor;

(m) respecting the records to be maintained by high-cost credit grantors, including the length of time for which and location at which records must be retained;

(n) respecting information, including personal information, required to be provided to the director and the times, form and manner in which the information is to be provided;

High-Cost Credit Agreements

(o) respecting information and terms and conditions to be included in a high-cost credit agreement, including what must appear on the first page or at the beginning of the agreement and requiring the use of specified fonts or font sizes, and prescribing forms to be used for high-cost credit agreements and requiring their use;

(p) respecting cancellation under section 252, including

(i) modifying the application of section 252 to classes of high-cost credit products or agreements,

(ii) prescribing forms to be used to give notice of the right to cancel and to cancel the agreement, and

(iii) specifying whether a liability or obligation is, or is not, related to a high-cost credit agreement for the purpose of subsection 252(6);

(q) respecting cash cards and other devices or means used to access funds, including

(i) defining "cash card", or extending or limiting the meaning of that term, for the purposes of this Part,

(ii) governing the use of cash cards and other devices or means to access funds,

(iii) prescribing the balance below which the borrower is entitled to a cash payment, and

(iv) respecting the circumstances and manner in which a balance may be applied to the outstanding balance of a high-cost credit product;

(r) governing or prohibiting collateral or security — including the taking of wage assignments — that may be taken, received or given under a high-cost credit agreement;

High-Cost Credit Fees

(s) respecting any fee, charge, penalty or other amount (including any brokerage fee, credit assessment or approval fee, advance or draw fee, administrative or processing fee, fund access fee or charge, credit limit charge or penalty, or default charge or penalty, but not including interest within the meaning of The Constitution Act, 1867) charged, required or accepted in relation to a high-cost credit product or agreement, including

(i) restricting or prohibiting the charging, requiring or accepting of a fee, charge, penalty or other amount,

(ii) governing the circumstances in which a fee, charge, penalty or other amount may be charged, required or accepted,

(iii) specifying circumstances in which no fee, charge, penalty or other amount may be charged, required or accepted,

(iv) prescribing the maximum amount — or establishing a rate, formula or tariff for determining the maximum amount — of a fee, charge, penalty or other amount that may be charged, required or accepted, and

(v) requiring refunds to, or reimbursements of, borrowers if more than the prescribed or determined maximum amount is charged, required or accepted, and respecting joint and several liability of high-cost credit grantors for those refunds or reimbursements;

(t) governing or prohibiting the charging, requiring or accepting of a fee, charge or other amount for the use of a prescribed form;

High-Cost Credit Products

(u) respecting the timing or manner of advances of or draws on high-cost credit products;

(v) respecting receipts, including receipts for advances and draws, and prescribing the form and content of a receipt and requiring the use of a prescribed form;

(w) respecting statements of account, including prescribing their form and content, and requiring the use of a prescribed form;

(x) respecting Internet high-cost credit products;

Miscellaneous

(y) modifying or limiting the application of Part II and the regulations under that Part to high-cost credit products, high-cost credit grantors and high-cost credit agreements, including

(i) modifying or limiting any definition in subsection 1(1), or clarifying its application, for the purposes of this Part, and

(ii) modifying or limiting any provision of Part II, or clarifying its application, for the purposes of this Part;

(z) defining any word or phrase used but not defined in this Part;

(aa) prescribing anything referred to in this Part as being prescribed;

(bb) respecting any other matter the Lieutenant Governor in Council considers necessary for the administration of this Part.

Scope and application of regulation

255(2)      A regulation under this Part

(a) may be general or particular in its application; and

(b) may establish classes and may apply differently to different classes.

Regulations about Internet high-cost credit products

255(3)      Without limiting clause (1)(x), a regulation made under that clause may do one or more of the following:

(a) designate another jurisdiction as a reciprocating jurisdiction if, in the opinion of the Lieutenant Governor in Council, it has similar law for the regulation of high-cost credit products;

(b) authorize the minister, on behalf of the government, to enter into an agreement with the government of a reciprocating jurisdiction respecting the application, administration or enforcement of this Part or the law of that jurisdiction in respect of Internet high-cost credit products;

(c) in accordance with any agreement made under clause (b), specify which law applies or does not apply when both this Part and the law of the reciprocating jurisdiction purport to apply to an Internet high-cost credit product;

(d) extend, modify or limit the application of any provision of this Part in relation to an Internet high-cost credit product.

Use of prescribed form by high-cost credit grantor

255(4)      Section 37 of The Interpretation Act does not apply to a prescribed form that a high-cost credit grantor is required to use under this Part.

TRANSITIONAL APPLICATION

Credit agreements

256(1)      Subject to subsections (2) and (3), this Part and any regulations under this Part apply to

(a) a high-cost credit agreement entered into on or after the day of the coming into force of this section;

(b) a high-cost credit agreement under which open credit is extended that is entered into before the day of the coming into force of this section; and

(c) a high-cost credit agreement under which credit other than open credit is extended that was entered into before the day of the coming into force of this section if it is renewed, extended or amended on or after that date.

Exception

256(2)      Subsection 252(2) does not apply to a high-cost credit agreement described in clause (1)(b).

Regulations

256(3)      The Lieutenant Governor in Council may make regulations respecting the application of this Part to any high-cost credit agreements entered into before the day of the coming into force of this section.

13          The following is added as Part XXVI:

PART XXVI FINANCIAL LITERACY FUND

Definitions

257         The following definitions apply in this Part.

"fund" means the Manitoba Borrowers' Financial Literacy Fund continued under subsection 258(1). (« Fonds »)

"high-cost credit grantor" and "high-cost credit product" have the same meaning as in Part XXV (High-Cost Credit Products). (« fournisseur de crédit à coût élevé » et « produit de crédit à coût élevé »)

"payday lender" and "payday loan" have the same meaning as in Part XVIII (Payday Loans). (« prêt de dépannage » et « prêteur »)

Continuation and purpose of fund

258(1)      The Manitoba Payday Borrowers' Financial Literacy Fund is hereby continued as the Manitoba Borrowers' Financial Literacy Fund for the purpose of funding, or supplementing the funding of, programs and activities designed to improve the financial literacy of borrowers and potential borrowers under agreements relating to high-cost credit products and payday loans.

Deposit in Consolidated Fund

258(2)      Money in the fund is to be deposited in a separate, interest-bearing account in the Consolidated Fund in trust for the fund.

Payments into the fund

258(3)      Despite The Financial Administration Act, the following are to be paid or credited to the fund:

(a) the levies paid under section 259 (financial literacy support levy);

(b) amounts authorized to be so paid and applied by an Act of the Legislature;

(c) interest and other income earned on the amounts paid or credited to the fund.

Management of fund

258(4)      The minister is responsible for managing the fund and may make or authorize payments from the fund

(a) for the purpose of the fund; and

(b) to pay administrative expenses of operating the fund.

Annual report

258(5)      For each fiscal year, the annual report of the department over which the minister presides must include a report of the accounts and transactions of the fund.

Financial literacy support levy

259         Subject to the regulations, the following licence holders must pay to the government each year, at the prescribed time or times, a financial literacy support levy:

(a) a licensed payday lender;

(b) a licensed high-cost credit grantor.

The amount of the financial literacy support levy is to be determined in accordance with the regulations.

Regulations

260(1)      The Lieutenant Governor in Council may make regulations

(a) respecting the financial literacy support levy, including

(i) prescribing the amount of the levy or a rate or formula for determining the amount of the levy,

(ii) prescribing the time for payment of the levy, and

(iii) requiring payday lenders and high-cost credit grantors to file reports or returns of information that the director considers necessary to determine or verify the amount of the levy payable by them;

(b) respecting any other matter the Lieutenant Governor in Council considers necessary for the administration of this Part.

Scope and application of regulation

260(2)      A regulation under subsection (1)

(a) may be general or particular in its application; and

(b) may establish classes of payday lenders and high-cost credit grantors and may apply differently to different classes.

Transitional — licensing

14          If,

(a) at any time before section 238 comes into force, a credit grantor offers, arranges or provides one or more credit products within the meaning of Part XXV (High-Cost Credit Products); and

(b) within 14 days after that section comes into force, that credit grantor submits an application for a licence under Part XXV;

then subsections 241(1) and (2) do not begin to apply to that credit grantor until the earlier of

(c) the date that a copy of the director's decision to issue or refuse to issue a licence is served on the credit grantor; or

(d) 90 days after those subsections come into force.

Transitional — financial literacy fund

15          Despite The Financial Administration Act, any amounts that remain due and payable under section 161.7 (financial literacy support levy) on or before the day that section is repealed are to be paid or credited to the Manitoba Borrowers' Financial Literacy Fund continued under subsection 258(1).

Coming into force

16          This Act comes into force on a day to be fixed by proclamation.

Explanatory Note

This Bill amends The Consumer Protection Act to add a new Part about high-cost credit products.

A high-cost credit product is a loan, a line of credit or a similar form of credit that meets the criteria set out in the regulations. Cabinet may also make regulations specifying other types of high-cost credit products. The new Part does not apply to regulated payday loans, mortgages or credit extended by banks or credit unions.

Only licensed high-cost credit grantors may offer, arrange or provide high-cost credit products. A licensed high-cost credit grantor must

  • post signs at each business location stating that the products are high-cost credit products and setting out information about the cost of credit;
  • disclose before the borrower enters into the agreement key information about the high-cost credit product and the agreement, the cost of credit, and the borrower's rights;
  • give the borrower reasonable time to review the disclosed information and the agreement and provide a copy of the completed agreement to the borrower at no cost;
  • not charge a fee or penalty for early repayment; and
  • keep records of its high-cost credit products and agreements.

A borrower may cancel a high-cost credit agreement within 48 hours after entering into it or at any time if the borrower was not notified of the 48-hour cancellation right.

The new Part also provides for a comprehensive set of Cabinet regulation-making powers to deal with high-cost credit products, agreements and credit grantors (section 255).

The Manitoba Payday Borrowers' Financial Literacy Fund is renamed the Manitoba Borrowers' Financial Literacy Fund. High-cost credit grantors are required to pay into the fund.

This Bill includes amendments to clarify certain provisions of Part XVIII (Payday Loans) of The Consumer Protection Act and to ensure the consistency of that Part with the new Part.