Cost of Borrowing (Retail Associations) Regulations (SOR/2002-263)
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Regulations are current to 2024-11-26 and last amended on 2016-06-14. Previous Versions
Disclosure — Content
Fixed Interest Loans for a Fixed Amount
8 (1) A retail association that enters into a credit agreement for a loan for a fixed interest rate for a fixed amount, to be repaid on a fixed future date or by instalment payments, must provide the borrower with an initial disclosure statement that includes the following information:
(a) the principal amount of the loan;
(b) the amount of the advance, or any advances, of the principal and when it is, or they are, to be made;
(c) the total amount of all payments;
(d) the cost of borrowing over the term of the loan, expressed as an amount;
(e) the term of the loan, and the period of amortization if different from the term;
(f) the annual interest rate and the circumstances under which it is compounded, if any;
(g) the APR, when it differs from the annual interest rate;
(h) the date on and after which interest is charged and information concerning any period during which interest does not accrue;
(i) the amount of each payment and when it is due;
(j) the fact that each payment made on a loan must be applied first to the accumulated cost of borrowing and then to the outstanding principal;
(k) information about any optional service in relation to the credit agreement that the borrower accepts, the charges for each optional service and the conditions under which the borrower may cancel the service if that information is not disclosed in a separate statement before the optional service is provided;
(l) the disclosure required by paragraph 385.18(1)(a) of the Act, including a description of any components that comprise a formula to calculate a rebate, charge or penalty in the event that the borrower exercises the right to repay the amount borrowed before the maturity of the loan and, if section 17 applies, the formula set out in subsection 17(4);
(m) the disclosure required by paragraph 385.18(1)(b) of the Act, including default charges that may be imposed under section 18;
(n) the property, if any, over which the retail association takes a security interest under the credit agreement;
(o) any charge for a broker, if the broker’s fees are included in the amount borrowed and are paid directly by the retail association to the broker;
(p) the existence of a fee to discharge a security interest and the amount of the fee on the day that the statement was provided; and
(q) the nature and amount of any other charge, other than interest charges.
(2) If the missing of a scheduled instalment payment or the imposition of a default charge for a missed scheduled instalment payment increases the outstanding balance of a loan referred to in subsection (1) with the result that each subsequently scheduled instalment payment does not cover the interest accrued during the period for which it was scheduled, the retail association must, at most 30 days after the missed payment or the imposition of the default charge, provide the borrower with a subsequent disclosure statement that describes the situation and its consequences.
Variable Interest Loans for a Fixed Amount
9 (1) A retail association that enters into a credit agreement for a loan with a variable interest rate for a fixed amount, to be repaid on a fixed future date or by instalment payments, must provide an initial disclosure statement that includes the following information in addition to that required by section 8:
(a) the annual rate of interest that applies on the date of the disclosure;
(b) the method for determining the annual interest rate and when that determination is made;
(c) the amount of each payment based on the annual interest rate that applies on the date of the disclosure and the dates when those payments are due;
(d) the total amount of all payments and of the cost of borrowing based on that annual interest rate;
(e) if the loan is to be paid by instalment payments and the amount to be paid is not adjusted automatically to reflect changes in the annual interest rate that apply to each instalment payment,
(i) the triggering annual interest rate above which the amount paid under a scheduled instalment payment on the initial principal does not cover the interest due on the instalment payment, and
(ii) the fact that negative amortization is possible; and
(f) if the loan does not have regularly scheduled payments,
(i) the conditions that must occur for the entire outstanding balance, or part of it, to become due, or
(ii) which provisions of the credit agreement set out those conditions.
(2) If the variable interest rate for the loan is determined by adding or subtracting a fixed percentage rate of interest to or from a public index that is a variable rate, the retail association must, at least once every 12 months, provide the borrower with a subsequent disclosure statement that contains the following information:
(a) the annual interest rate at the beginning and end of the period covered by the disclosure;
(b) the outstanding balance at the beginning and end of the period covered by the disclosure; and
(c) the amount of each instalment payment due under a payment schedule and the time when each payment is due, based on the annual interest rate that applies at the end of the period covered by the disclosure.
(3) If the variable interest rate for the loan is determined by a method other than that referred to in subsection (2), the retail association must, at most 30 days after increasing the annual interest rate by more than 1% above the most recently disclosed rate, provide the borrower with a subsequent disclosure statement that contains the following information:
(a) the new annual interest rate and the date on which it takes effect; and
(b) the amount of each instalment payment and the time when each payment is due, for payments that are affected by the new annual interest rate.
Lines of Credit
10 (1) A retail association that enters into a credit agreement for a line of credit must provide the borrower with an initial disclosure statement that includes the following information:
(a) the initial credit limit, if it is known at the time the disclosure is made;
(b) the annual interest rate, or the method for determining it if it is variable;
(c) the nature and amounts of any non-interest charges;
(d) the minimum payment during each payment period or the method for determining it;
(e) each period for which a statement of account is to be provided;
(f) the date on and after which interest accrues and information concerning any grace period that applies;
(g) the particulars of the charges or penalties referred to in paragraph 385.18(1)(b) of the Act, including default charges that may be imposed under section 18 of these Regulations;
(h) the property, if any, over which the retail association takes a security interest under the credit agreement;
(i) information about any optional service in relation to the credit agreement that the borrower accepts, the charges for each optional service and the conditions under which the borrower may cancel the service if that information is not disclosed in a separate statement before the optional service is provided;
(j) a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the retail association’s regular business hours; and
(k) any charge for a broker, if the broker’s fees are included in the amount borrowed and are paid directly by the retail association to the broker.
(2) If the initial credit limit is not known when the initial disclosure statement is made, the retail association must disclose it in
(a) the first statement of account provided to the borrower; or
(b) a separate statement that the borrower receives on or before the date on which the borrower receives that first statement of account.
(3) Subject to subsections (4) and (5), the retail association must, at least once a month, provide the borrower with a subsequent disclosure statement that contains the following information:
(a) the period covered and the opening and closing balances in the period;
(b) an itemized statement of account that discloses each amount credited or charged, including interest, and the dates when those amounts were posted to the account;
(c) the sum for payments and the sum for credit advances and non-interest and interest charges;
(d) the annual interest rate that applied on each day in the period and the total of interest charged under those rates in the period;
(e) the credit limit and the amount of credit available at the end of the period;
(f) the minimum payment and its due date;
(g) the borrower’s rights and obligations regarding any billing error that may appear in the statement of account; and
(h) a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the retail association’s regular business hours.
(4) The subsequent periodic disclosure statement is not required to be provided for a period during which there have been no advances or payments and
(a) there is no outstanding balance at the end of the period; or
(b) the borrower has notice that their credit agreement has been suspended or cancelled due to default and the retail association has demanded payment of the outstanding balance.
(5) The subsequent periodic disclosure statement may be provided once in a three-month period, either in respect of that period or in respect of the last month of that period, if, during that period,
(a) there have been no advances or payments;
(b) there is an outstanding balance of less than $10; and
(c) no interest or fee is being charged or accrued.
- SOR/2009-261, s. 5
Credit Card Applications
11 (1) A retail association that issues credit cards and that distributes an application form for credit cards must specify the following information in the form or in a document accompanying it, including the date on which each of the matters mentioned takes effect:
(a) in the case of a credit card with a
(i) fixed rate of interest, the annual interest rate, or
(ii) variable interest rate that is determined by adding or subtracting a fixed percentage rate of interest to or from a public index, the public index and the fixed percentage rate to be added or subtracted from it;
(b) the day on and after which interest accrues and information concerning any grace period that applies; and
(c) the amount of any non-interest charges.
(2) If the information box set out in Schedule 4, containing the information required by paragraph 6(2.1)(b) or (2.2)(b), as applicable, is included in an application form for a credit card or accompanies that application form, the retail association is considered to have met the requirements of subsection (1).
(3) If an applicant for a credit card applies by telephone or any electronic means, the retail association must disclose to them the information required by paragraphs (1)(a) to (c) at the time of the application.
(4) If a retail association that issues credit cards solicits applications for them in person, by mail, by telephone or by any electronic means, the information required by paragraphs (1)(a) and (c) must be disclosed at the time of the solicitation.
- SOR/2009-261, s. 6
- SOR/2014-273, s. 21(F)
Credit Cards
12 (1) A retail association that enters into a credit agreement for a credit card must provide the borrower with an initial disclosure statement that includes the following information in addition to that required by paragraphs 10(1)(a) and (c) to (k):
(a) the manner in which interest is calculated and the information required by paragraph 11(1)(a);
(b) if the borrower is required by the credit agreement to pay the outstanding balance in full on receiving a statement of account,
(i) mention of that requirement,
(ii) the grace period by the end of which the borrower must have paid that balance, and
(iii) the annual interest rate charged on any outstanding balance not paid when due;
(c) if a lost or stolen credit card is used in an unauthorized manner, the maximum liability of the borrower is the lesser of $50 and the maximum set by the credit agreement;
(d) if a transaction is entered into at an automated teller machine by using the borrower’s personal identification number, the liability incurred by the transaction is, despite paragraph (c), the maximum liability; and
(e) if the retail association has received a report from the borrower, whether written or verbal, of a lost or stolen credit card, the borrower has no liability to pay for any transaction entered into through the use of the card after the receipt of the report.
(2) If the initial credit limit is not known when the initial disclosure statement is made, the retail association must disclose it in
(a) the first statement of account provided to the borrower; or
(b) a separate statement that the borrower receives on or before the date on which the borrower receives that first statement of account.
(3) Despite section 13, if a credit agreement for a credit card is amended, the retail association must, in writing and 30 days or more before the amendment takes effect, disclose to the borrower the changes to the information required to be disclosed in the initial statement other than any of those changes that involve
(a) a change in the credit limit;
(b) an extension to the grace period;
(c) a decrease in non-interest charges or default charges referred to in paragraphs 10(1)(c) and (g);
(d) a change concerning information about any optional service in relation to the credit agreement that is referred to in paragraph 10(1)(i);
(e) a change in a variable interest rate referred to in subparagraph 11(1)(a)(ii) as a result of a change in the public index referred to in that subparagraph; and
(f) a decrease in the fixed rate of interest or a decrease in the fixed percentage rate of interest referred to in subparagraph 11(1)(a)(ii).
(4) An amendment referred to in any of paragraphs (3)(a) to (d) or (f) must be disclosed not later than in the first subsequent periodic disclosure statement that is provided after the date of the amendment.
(5) Subject to subsections (8) and (9), a retail association that issues credit cards must provide borrowers with supplementary disclosure statements on a regular periodic basis, at least once a month, that disclose the information referred to in paragraphs 10(3)(a) and (d) to (h) and that, in addition, contain the following information:
(a) an itemized statement of account that describes each transaction and discloses each amount credited or charged, including interest, and the dates when those amounts were posted to the account;
(b) the amount that the borrower must pay, on or before a specified due date, in order to have the benefit of a grace period;
(c) the sum for payments and the sum for purchases, credit advances and interest and non-interest charges;
(d) subject to subsection (7), an estimate of the length of time in months and years that would be required to pay in full the outstanding balance set out in the supplementary disclosure statement, based on the assumption that
(i) the minimum payment set out in that statement and in each subsequent supplementary disclosure statement will be made on its corresponding due date,
(ii) the annual interest rate that applies on the date of the supplementary disclosure statement in respect of purchases of goods or services, or that, based on the information available on that date, is expected to apply in respect of such purchases after a period during which a promotional or special introductory interest rate applies, will be applied to the outstanding balance until it is paid,
(iii) the outstanding balance is rounded up to the nearest hundred dollars for the purpose of arriving at that estimate, and,
(iv) a year is considered to consist of not less than 360 days and not more than 366 days; and
(e) if the annual interest rate that applies on the date of the supplementary disclosure statement, other than a variable interest rate referred to in subparagraph 11(1)(a)(ii) or an interest rate that has been disclosed to a borrower under subsection (3), could increase in the next period, the circumstances that would give rise to that increase and any new rate of interest that would apply in the next period as a result of the increase.
(6) For the purpose of paragraph (5)(a), an itemized statement of account is adequate if it permits the borrower to verify each transaction described by linking it with a transaction record provided to the borrower.
(7) The estimate referred to in paragraph (5)(d) is not required to be provided if the borrower is required to pay the outstanding balance in full on receiving a statement of account.
(8) The supplementary disclosure statement is not required to be provided for a period during which there have been no advances or payments and
(a) there is no outstanding balance at the end of the period; or
(b) the borrower has notice that their credit agreement has been suspended or cancelled due to default and the retail association has demanded payment of the outstanding balance.
(9) The supplementary disclosure statement may be provided once in a three-month period, either in respect of that period or in respect of the last month of that period, if, during that period,
(a) there have been no advances or payments;
(b) there is an outstanding balance of less than $10; and
(c) no interest or fee is being charged or accrued.
- SOR/2009-261, s. 7
- SOR/2014-273, s. 22(F)
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