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Financial Consumer Protection Framework Regulations (SOR/2021-181)

Regulations are current to 2022-07-25 and last amended on 2022-06-30. Previous Versions

Financial Consumer Protection Framework Regulations

SOR/2021-181

BANK ACT

COOPERATIVE CREDIT ASSOCIATIONS ACT

INSURANCE COMPANIES ACT

PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT

TRUST AND LOAN COMPANIES ACT

Registration 2021-08-04

Financial Consumer Protection Framework Regulations

P.C. 2021-805 2021-08-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Financial Consumer Protection Framework Regulations pursuant to

Interpretation

Marginal note:Definitions

 The following definitions apply in these Regulations.

Act

Act means the Bank Act. (Loi)

APR

APR or annual percentage rate means the cost of borrowing for a loan under a credit agreement, expressed as an annual rate on the principal referred to in subsection 47(1). (TAC ou taux annuel du coût d’emprunt)

disbursement charge

disbursement charge means a charge, other than one referred to in subsection 48(1), to recover an expense incurred by an institution to arrange, document, insure or secure a credit agreement. It includes a charge referred to in any of paragraphs 48(2)(c) or (f) to (h). (frais de débours)

insurer

insurer includes a government agency that provides insurance referred to in subsection 627.992(1) of the Act. (assureur)

principal

principal means the amount borrowed under a credit agreement but does not include any cost of borrowing. (capital)

public index

public index means an interest rate, or a variable base rate for an interest rate, that is published at least weekly in a newspaper or magazine of general circulation, or in some media of general circulation or distribution, in areas where natural persons who — for purposes other than business purposes — have entered into credit agreements that are governed by that rate reside. (indice publié)

Marginal note:Interpretation — product or service

 For the purposes of Part XII.2 of the Act, the expression “product or service” does not include a derivative, as defined in subsection 415.2(2) of the Act, or an eligible financial contract, as defined in subsection 415.2(3) of the Act.

PART 1Fair and Equitable Dealings

Responsible Business Conduct

Requirements for Cancelling Agreements

Marginal note:Cancellation period — certain deposit accounts

 For the purposes of paragraph 627.1(1)(b) of the Act, the prescribed period in respect of a deposit account other than a retail deposit account is 14 business days after the day on which the deposit account is opened.

Marginal note:Prescribed products and services

 For the purposes of section 627.11 of the Act, the following products and services are prescribed products and services:

  • (a) optional products or services that are provided on an ongoing basis;

  • (b) principal-protected notes that are issued under an agreement entered into by electronic means or by telephone by an institution that has made a public commitment referred to in paragraph 3(2)(c) of the Financial Consumer Agency of Canada Act to allow an investor to cancel the purchase of a principal-protected note;

  • (c) principal-protected notes that are issued under an agreement that is entered into by means other than those referred to in paragraph (b);

  • (d) loans secured by mortgages on real property;

  • (e) registered products; and

  • (f) prepaid payment products.

Marginal note:Cancellation of retail deposit account

  •  (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a retail deposit account that the person notify the institution of the cancellation within 14 business days after the day on which the retail deposit account is opened.

  • Marginal note:Obligations of institution

    (2) For the purposes of subsection 627.11(2) of the Act, the following requirements are prescribed requirements for the cancellation of the agreement:

    • (a) the institution is to close the retail deposit account without charge; and

    • (b) the institution is to refund any charges related to the operation of the retail deposit account, other than interest charges, that are incurred while the account was open.

Marginal note:Cancellation of deposit-type instrument

  •  (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a new deposit-type instrument referred to in subsection 627.78(2) of the Act that the person notify the institution of the cancellation within 10 business days after the day on which the instrument is issued.

  • Marginal note:Obligations of institution

    (2) For the purposes of subsection 627.11(2) of the Act, the following requirements are prescribed requirements for the cancellation of the agreement:

    • (a) the institution is to cancel the agreement without charge; and

    • (b) the institution is to repay the principal.

Marginal note:Cancellation of optional product or service

  •  (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of an optional product or service that the person is to notify the institution of the cancellation.

  • Marginal note:Obligation of institution — timing

    (2) For the purposes of subsection 627.11(2) of the Act, it is a prescribed requirement for the cancellation of the agreement that the institution is to cancel the optional product or service on the day on which the billing cycle ends or 30 days after the notification is received, whichever is earlier.

  • Marginal note:Obligation of institution — credit or refund

    (3) For the purposes of subsection 627.11(2) of the Act, it is a prescribed requirement for the cancellation of the agreement that the institution is to refund or credit the person with the amount determined by the following formula:

    R = A × ((n – m)/n)

    where

    R
    is the amount to be refunded or credited;
    A
    is the amount of any charges that are paid by the person for any part of the optional product or service that is unused as of the day the cancellation takes effect;
    n
    is the period between the imposition of the charges and the time when the optional product or service was, before the cancellation, scheduled to end; and
    m
    is the period between the imposition of the charges and the cancellation.

Marginal note:Cancellation of principal-protected note

 For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a principal-protected note referred to in paragraph 4(b) of these Regulations that the person notify the institution of the cancellation within two days after the day on which the agreement is entered into.

Access to Basic Banking Services

Marginal note:Availability

 For the purposes of section 627.21 of the Act, the prescribed amount is $1,500.

Marginal note:Cashing

 For the purposes of paragraph 627.25(1)(c) of the Act, the prescribed amount is $1,750.

Credit

Marginal note:Prepayment

  •  (1) For the purposes of subsection 627.28(4) of the Act, the charges referred to in subsection 48(1) of these Regulations, excluding any interest or discount applicable to the loan and any disbursement charges paid by the person or added to the balance of the loan, are prescribed charges.

  • Marginal note:Refund or credit

    (2) For the purposes of subsection 627.28(4) of the Act, the prescribed amount in relation to a prepayment referred to in paragraph 627.28(3)(a) of the Act is either

    • (a) if the person repays only part of the outstanding balance under the credit agreement, zero; or

    • (b) if the person repays the entire outstanding balance under the credit agreement, the amount determined by the formula

      R = A × ((n – m)/n)

      where

      R
      is the amount to be refunded or credited;
      A
      is the amount of any non-interest charges, except for disbursement charges, paid by the person or added to the balance;
      n
      is the period between the imposition of the non-interest charges and the scheduled end of the term of the loan; and
      m
      is the period between the imposition of the non-interest charges and the prepayment.

Marginal note:Renewal of mortgages — prescribed period

  •  (1) For the purposes of paragraph 627.31(a) of the Act, the prescribed period is the period beginning on the day on which the prescribed information is disclosed to the person under subsection 627.89(6) of the Act and ending on the day on which the credit agreement is renewed.

  • Marginal note:Renewal of mortgages — prescribed day

    (2) For the purposes of paragraph 627.31(b) of the Act, the prescribed day is the day that is 21 days after the day on which the prescribed information is disclosed to the person under subsection 627.89(6) of the Act.

Marginal note:Debt collection practices

 For the purposes of paragraph 627.37(b) of the Act, the debt collection practices set out in the schedule are prescribed debt collection practices.

Complaints Process

Marginal note:Period for dealing with complaints

 For the purposes of paragraph 627.43(1)(a) of the Act, the prescribed period for dealing with a complaint is 56 days after the day on which the complaint is received.

Marginal note:Provision of information after complaint

 For the purposes of paragraph 627.43(4)(b) of the Act, one of the following documents must be used to provide the information referred to in that paragraph:

  • (a) a brochure, statement of account or written statement that contains other information that is required to be disclosed under the Act in respect of an agreement for a product or service or in respect of any other obligation of the institution under a consumer provision; or

  • (b) a separate document.

Marginal note:Conditions for maintaining approval

 For the purposes of paragraph 627.49(m) of the Act, the following are prescribed conditions for the body corporate:

  • (a) it is to accept as a member any institution that makes a request to it for membership;

  • (b) it is to transfer a complaint received by it, along with all related information that is in its possession or control, to another external complaints body if an institution that is a party to the complaint becomes a member of that other body before a final recommendation is made in respect of the complaint;

  • (c) it is to advise, in writing, the parties to a complaint that is transferred to it by another external complaints body that an institution that is a party to the complaint has become a member of the body corporate and that the complaint has been transferred;

  • (d) it is to inform the parties to a complaint about its terms of reference and procedures for dealing with complaints and, on request, to provide the parties with any further information and assistance that is necessary to enable them to understand the requirements of those terms of reference and procedures;

  • (e) it is to deal with complaints in a manner that affects only the parties to the complaints; and

  • (f) it is to consult, at least once a year, its members and any persons who have made complaints to it since the previous consultation with respect to the discharge of its functions and the performance of its activities as an external complaints body.

Marginal note:Provision of information to customers and public

 For the purposes of section 627.65 of the Act, one of the following documents must be used to disclose the information referred to in that section:

  • (a) a brochure, statement of account or written statement that contains other information that is required to be disclosed under the Act in respect of an agreement for a product or service or in respect of any other obligation of the institution under a consumer provision; or

  • (b) a separate document.

PART 2Disclosure and Transparency for Informed Decisions

Key Product Information

General

Marginal note:Disclosure by mail

 If information that must be disclosed under Part XII.2 of the Act is sent by mail, it is deemed to have been disclosed on the fifth business day after the postmark date.

Marginal note:Renewal or rollover

 For the purposes of paragraph 627.6(2)(a) of the Act, the interest rate is disclosed if it is provided directly to the person or indirectly by means of a telephone number or website that can be accessed by the person.

Deposit Accounts, Financial Instruments and Notes

Deposit Accounts

Marginal note:Agreement by telephone

  •  (1) For the purposes of subparagraph 627.55(2)(a)(ii) of the Act, the following information is prescribed information in relation to a deposit account:

    • (a) the annual interest rate;

    • (b) the frequency of interest payments;

    • (c) the manner, if any, in which the balance in the deposit account affects the interest rate;

    • (d) for a fixed-rate interest-bearing deposit account, the interest rate applicable to the account and how the amount of interest to be paid is to be calculated;

    • (e) for a variable-rate interest-bearing deposit account, the current interest rate, the manner by which the rate and amount of interest to be paid is to be calculated, and how, in the future, the customer may obtain information on the interest rate applicable to the account;

    • (f) any other circumstance that affects the interest rate;

    • (g) for a deposit account that does not have a fixed monthly charge for a service package, the applicable charges for monthly statements of account, passbook updates, cash withdrawals, cheque withdrawals, debit payment purchases, preauthorized debits, bill payments, transfers between accounts and, if cheques are offered to the customer at the time the account is opened, cheque orders;

    • (h) for a deposit account that has a fixed monthly charge for a service package, the key features of the package — including the monthly charge, the number and type of permitted transactions per billing cycle — and the applicable charges for additional transactions described in paragraph (g);

    • (i) the fact that the person is receiving by telephone only part of the information relating to the deposit account charges and terms and that full disclosure in writing will be provided after entering into the agreement; and

    • (j) the fact that the person may, within 14 business days after the deposit account has been opened, close the account without charge and, in such a case, is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.

  • Marginal note:Use of generic terms

    (2) For the purpose of providing the information referred to in paragraphs (1)(g) and (h), an institution may group similar types of transactions for which the institution charges the same amount under a generic term.

Marginal note:Charges for prescribed services

 For the purposes of subparagraph 627.68(b)(i) and subsection 627.72(1) of the Act, the following services are prescribed services:

  • (a) the acceptance of deposits;

  • (b) the acceptance of coins, cheques or Bank of Canada notes for deposit;

  • (c) the issuance of cheques;

  • (d) the certification of cheques;

  • (e) the handling of a cheque presented by a customer that is subsequently returned because there are not sufficient funds;

  • (f) the holding of cheques for deposit;

  • (g) the handling of cheques drawn in the currency of the United States;

  • (h) the processing of a stop payment on a cheque;

  • (i) the handling of a cheque issued by a customer that is subsequently returned because there are not sufficient funds;

  • (j) the supply of coins and Bank of Canada notes;

  • (k) the handling of overdrafts;

  • (l) the transfer of funds between accounts;

  • (m) the supply of account statements;

  • (n) the handling of account confirmations;

  • (o) the conduct of searches related to an account;

  • (p) the provision of information in regard to an account balance;

  • (q) the closing of an account; and

  • (r) the handling of unclaimed balances in inactive accounts.

 
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