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

Regulations are current to 2022-08-08 and last amended on 2022-06-30. Previous Versions

PART 2Disclosure and Transparency for Informed Decisions (continued)

Key Product Information (continued)

Deposit Accounts, Financial Instruments and Notes (continued)

Marginal note:Opening of deposit account

 For the purposes of paragraph 627.69(1)(d) of the Act, the following information is prescribed information:

  • (a) the frequency of interest payments;

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

  • (c) any other circumstance that affects the interest rate.

Marginal note:Non-application — subsection 627.72(1) of Act

 Subsection 627.72(1) of the Act does not apply in respect of an increase to a charge applicable to a service referred to in section 21 of these Regulations that is in relation to a deposit account in Canada other than a personal deposit account if the institution and the person agree in writing that the institution will charge an amount other than an amount that the institution is required to disclose under section 627.68 of the Act.

Deposit Insurance

Marginal note:Authorized foreign banks

  •  (1) For the purposes of paragraph 627.75(a) of the Act, the following information is prescribed information:

    • (a) a statement that the authorized foreign bank is authorized to carry on business in Canada under the Act;

    • (b) the name of the authorized foreign bank’s primary supervisor and a statement that the supervisor is responsible for the supervision of the total business and affairs of the authorized foreign bank;

    • (c) a statement that the authorized foreign bank’s business in Canada is supervised by the Office of the Superintendent of Financial Institutions; and

    • (d) the name and address of the Office of the Superintendent of Financial Institutions.

  • Marginal note:Manner of disclosure

    (2) Either the account agreement or a separate document must be used to disclose the information that must be disclosed under paragraph 627.75(a) of the Act.

Financial Instruments and Notes

Marginal note:Agreement by telephone

 For the purposes of subparagraph 627.55(2)(a)(ii) of the Act, the following information is prescribed information in relation to a deposit-type instrument:

  • (a) when interest is calculated and paid under the instrument;

  • (b) whether the instrument may be redeemed prior to maturity and, if so, the effect of early redemption on the interest payable; and

  • (c) if the agreement provides that after the maturity of the instrument a new deposit-type instrument may be issued to the person without a further agreement being entered into, the fact that a new instrument may be issued without a further agreement, the conditions under which a new instrument may be issued without a further agreement and

    • (i) whether its interest rate is fixed or variable, and the rate or method for determining the rate,

    • (ii) its investment period, and

    • (iii) any charges related to its issuance or the cancellation of its issuance.

Marginal note:Availability of information

 For the purposes of section 627.77 of the Act, the following information is prescribed information:

  • (a) the information referred to in paragraphs 627.78(1)(a) to (j) of the Act; and

  • (b) in relation to a principal-protected note, the information referred to in paragraphs 27(a) to (d) of these Regulations.

Marginal note:Issuance of principal-protected note

 For the purposes of paragraph 627.78(1)(k) of the Act, the following information is prescribed information in relation to a principal-protected note:

  • (a) the distinction between principal-protected notes and fixed-rate investments with respect to the levels of risk and return;

  • (b) the circumstances in which a principal-protected note could be an appropriate investment;

  • (c) whether the note may be redeemed before its maturity and, if so, that redemption before maturity may result in the investor receiving less than the principal;

  • (d) the terms and conditions of any secondary market offered by the institution; and

  • (e) that the information referred to in section 26 of these Regulations is available on request and that the information referred to in section 627.8 of the Act is available on request after the note is issued.

Marginal note:Synopsis — principal-protected note

 If an agreement referred to in subsection 627.78(1) of the Act is an agreement that is in relation to a principal-protected note and is entered into in person or by telephone, the institution must ensure that a synopsis of the information that must be disclosed under that subsection is disclosed orally by a person who is knowledgeable about the terms and conditions of the note.

Marginal note:New instrument issued without further agreement

 For the purposes of subsection 627.78(2) of the Act, the information referred to in subsection 627.78(1) of the Act and section 25 of these Regulations is also prescribed information.

Marginal note:Advertisements

 For the purposes of paragraph 627.87(1)(c) of the Act, the following information is prescribed information:

  • (a) if an advertisement gives an example of a situation in which interest would be payable, an example of another situation in which no interest would be payable; and

  • (b) if an advertisement gives an example of a situation in which interest would be payable that is in addition to any minimum interest that is guaranteed, an example of another situation in which only the minimum interest would be payable.

Credit Agreements

General

Marginal note:Non-application — section 627.89 of Act

 Section 627.89 of the Act does not apply in respect of a credit agreement that is entered into under

  • (a) the Canada Student Loans Act; or

  • (b) any Act of Parliament or of the legislature of a province that relates to student loans and that requires the interest rate or the discount that may apply to the borrower to be disclosed to the borrower or to a person to whom a student loan is proposed to be made.

Marginal note:APR

 The APR for a credit agreement is the annual interest rate if the only cost of borrowing is interest.

Marginal note:Disclosure statement

  •  (1) Information that must be disclosed under section 627.89 of the Act must be provided in a disclosure statement that

    • (a) is part of the credit agreement;

    • (b) is part of the application for the credit agreement; or

    • (c) is set out in a separate document.

  • Marginal note:Part of credit agreement

    (2) If the disclosure statement is part of a credit agreement for a loan, line of credit or credit card, then the disclosure statement must be set out in a consolidated manner in a single location and the information box required under subsection 627.57(1) of the Act must be set out at the beginning of the agreement.

  • Marginal note:Separate document

    (3) If the disclosure statement is set out in a separate document then the information box must be set out at the beginning of the statement.

  • Marginal note:Repetition of numbers

    (4) Numbers that are set out in the information box — including numbers that refer to an interest rate, a period, a date or a dollar amount — are not required to be repeated in the disclosure statement but may instead be referenced in it.

  • Marginal note:Assumptions and estimates

    (5) Information in the disclosure statement may be based on an assumption or estimate if the assumption or estimate is reasonable and the information

    • (a) cannot be known by the institution at the time of disclosure; and

    • (b) is identified to the person entering into the agreement as an assumption or estimate.

Marginal note:Time of initial disclosure

 The initial disclosure statement for a credit agreement other than a credit agreement for a loan secured by a mortgage on real property must be provided on or before the earlier of

  • (a) the making of a payment, other than a disbursement charge, and

  • (b) the day on which the credit agreement is entered into.

Marginal note:Initial disclosure — optional services

  •  (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to optional services, including insurance services, that are offered on an ongoing basis:

    • (a) that the person may cancel the optional service by notifying the institution that the service is to be cancelled effective as of the day that is the earlier of one month after the day that the disclosure statement was provided to the person and the last day of a notice period provided for in the credit agreement; and

    • (b) that the institution must refund or credit the person with the proportional amount of any charges for the service paid for by the person or added to the balance of the loan, but unused as of the cancellation day referred to in the notice.

  • Marginal note:Provincial laws

    (2) For greater certainty, this section is subject to any provincial laws that apply to the cancellation of the agreement.

Marginal note:Disclosure to two or more persons

  •  (1) Subject to subsections (2) and (3), if a credit agreement is between an institution and two or more natural persons, then the institution must disclose the information that must be disclosed under section 627.89 of the Act to all of those persons.

  • Marginal note:Group disclosure — unanimity

    (2) If all of the persons have consented, orally or in writing, in paper or electronic form, to the disclosure of the information to one of the persons on their behalf, the institution must disclose the information to that person.

  • Marginal note:Group disclosure — no unanimity

    (3) If two or more but not all of the persons have consented, orally or in writing, in paper or electronic form, to the disclosure of the information on their behalf to one of the consenting persons, the institution may disclose the information to that person so long as it also discloses the information to each person that did not consent.

  • Marginal note:Confirmation of consent

    (4) If the consent referred to in subsection (2) or (3) is given orally by a person, the institution must provide confirmation of that consent to the person in writing, in paper or electronic form.

Marginal note:Amendments

  •  (1) For the purposes of paragraph 627.89(5)(a) of the Act, an amendment to the terms or conditions of a credit agreement that changes any information that was disclosed in accordance with subsection 627.89(1) of the Act in the initial disclosure statement is a prescribed amendment.

  • Marginal note:Information

    (2) For the purposes of paragraph 627.89(5)(b) of the Act, any information that is required to update the initial disclosure statement as a result of a change referred to in subsection (1) is prescribed information.

  • Marginal note:Time of disclosure

    (3) The prescribed amendment and any prescribed information must be disclosed in writing not later than 30 days after the day on which the amendment is made.

Loans

Marginal note:Information box — fixed interest loan for fixed amount

 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to a fixed interest loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

  • (a) the principal of the loan;

  • (b) the applicable annual interest rate and a brief description of how the interest is compounded, if applicable, and charged;

  • (c) the APR, if it differs from the annual interest rate, and a brief description of how it is determined;

  • (d) the number of months or years of the term of the loan and whether the term is open or closed, and a brief explanation of what “open” or “closed,” as applicable, means;

  • (e) the date on which the principal of the loan is to be advanced and the date on which interest is to begin to be charged;

  • (f) the amount of each payment, the date on which each payment is due, a brief description of the components of a payment and the frequency of the payments;

  • (g) the number of months or years of the amortization period, if that period is different from the term of the loan;

  • (h) a brief description of the conditions under which a person may repay a greater portion of the loan than required in any given period without incurring penalty charges for the prepayment of the loan, if applicable;

  • (i) the amount of the penalty charges, if any, for prepayment of the loan and a brief explanation of the manner in which the penalty charges are calculated;

  • (j) the amount of charges for insurance against default on a high-ratio mortgage on real property, if any; and

  • (k) a list of the types and amounts of any other charges, other than interest charges.

Marginal note:Information box — variable interest loan

 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to a variable interest loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

  • (a) the principal of the loan;

  • (b) the annual interest rate that applies on the date of the initial disclosure statement and a brief description of how the interest is compounded, if applicable, and charged;

  • (c) a brief description of the method for determining the annual interest rate and the date that the determination is made;

  • (d) the APR, if it differs from the annual interest rate, and a brief description of how it is determined;

  • (e) the number of months or years of the term of the loan and whether the term is open or closed, and provide a brief explanation of what “open” or “closed,” as applicable, means;

  • (f) the date on which the principal of the loan is to be advanced and the date on which interest is to begin to be charged;

  • (g) the amount of each payment, based on the annual interest rate that applies on the date of the initial disclosure statement, the date on which each payment is due and a brief description of the components of a payment and the frequency of the payments;

  • (h) the number of months or years of the amortization period, if that period is different from the term of the loan;

  • (i) a brief description of the conditions under which a person may repay a greater portion of the loan than required in any given period without incurring penalty charges for the prepayment of the loan, if applicable;

  • (j) the amount of the penalty charges, if any, for prepayment of the loan and a brief explanation of the manner in which the penalty charges are calculated;

  • (k) the amount of charges for insurance against default on a high-ratio mortgage on real property, if any; and

  • (l) a list of the types and amounts of any other charges, other than interest charges.

Marginal note:Initial disclosure — fixed interest rate loan

  •  (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to a fixed interest rate loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

    • (a) the principal of the loan;

    • (b) the amount that represents the cost of borrowing within the meaning of section 48 of these Regulations over the term of the loan;

    • (c) the amount of the advance, or any advances, of the principal and when it is, or they are, to be made;

    • (d) the total amount of all payments;

    • (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, if 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 person accepts, the charges for each optional service and the conditions under which the person may cancel the service if that information is not disclosed in a separate statement before the optional service is provided;

    • (l) a description of any components that comprise a formula to calculate a rebate, charge or penalty in the event that the person exercises the right to repay the amount borrowed before the maturity of the loan and, if paragraph 627.28(3)(a) of the Act applies in respect of the loan, the formula set out in subsection 11(2) of these Regulations;

    • (m) any default charges that may be imposed under section 627.3 of the Act;

    • (n) a description of the property, if any, over which the institution 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 institution 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.

  • Marginal note:Subsequent disclosure

    (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 the loan with the result that each subsequently scheduled instalment payment does not cover the interest accrued during the period for which it was scheduled, then, for the purposes of subsection 627.89(4) of the Act, a description of this situation and its consequences is prescribed information.

  • Marginal note:Time and manner of disclosure

    (3) The prescribed information referred to in subsection (2) must be disclosed in a statement that is provided not later than 30 days after the day on which the payment is missed or the default charge is imposed.

 
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