The Fair Trading Act and Credit2011

Service Alberta

Service Alberta

• Responsible for consumer protection in Alberta, which includes a number of regulatory measures related to consumer and creditor rights.

• Investigates consumer complaints, audits licensed businesses, oversees delegated regulatory organizations, and provides consumer education materials.

• For creditors, the key Acts Consumer Services is responsible for are the Debtors’ Assistance Act and Fair Trading Act.

Debtors’ Assistance Act

• The Province delegates responsibility for the Orderly Payment of Debts Program (Part X of the Bankruptcy Act) to the Debtors’ Assistance Board.

• Money Mentors (formerly Credit Counselling Services of

Alberta) offers credit counselling, administers the OPD program and offers financial literacy to consumers and businesses on behalf of the Debtors’ Assistance Board.

• Assisted 4,400 clients in 2010 and returned $9.8 million to creditors with an 82% OPD success rate.

Credit related FTA Regulations

• Collection and Debt Repayment Practices Regulation

• Cost of Credit Disclosure Regulation

• Credit and Personal Reports Regulation

• Payday Loans Regulation

Cost of Credit Disclosure

• Recent amendments: – definition of high-ratio mortgages (20%)

– APR disclosure on open credit

• National:– pressure on credit card liability limits

– financial literacy receiving increasing attention

• FAQs:– cost of credit disclosure applies to any credit transaction

entered into in/from Alberta, there are no exceptions (though federal financial institutions are subject to federal jurisdiction)

Credit Reporting

• Work is ongoing on harmonizing national credit reporting standards.

• Alberta Finance is reviewing the use of credit reports for

insurance purposes. • FAQs:

– Express (verifiable) consent is a requirement prior to requesting a credit report

– Business debts should not be reported unless the individual has a personal obligation for the debt (partnership, guarantee, sole proprietorship, etc.)

– Businesses/collection agencies that file inaccurate information or refuse to remove information as a way to punish a consumer can be subject to enforcement action

Collection Practices

• Third party collection agencies and debt purchasers (debts in arrears) are regulated and must be licensed.

• Original creditors, most direct finance companies and agencies operating as first party receivables do not require a licence.

• Lawyers are exempt from the regulatory framework while they engage in the practice of law.

• Licensed collection agencies are responsible for any actions taken by lawyers that breach the regulations.

Collection Agencies and Creditors

• Collection agencies that receive monies from debtors are required to place all monies in trust.

• Requirement for an accountants’ report by an independent auditor/accountant annually to confirm handling and liability of trust.

• Collection agencies provide a security to Service Alberta that may cover a portion of creditor losses.

Debt Repayment Agencies

• Agencies acting on behalf of a debtor in negotiations with creditors must be licensed.

• Regulated fee caps for services provided to consumers tied to successful negotiations with creditors. No up-front fees are allowed for settlement negotiations.

• Lawyers are exempt from the regulatory framework while they engage in the practice of law.

• Monies must be held in trust prior to disbursement to creditors. Annual accountants’ report required.

Educational Materials

• A wide variety of tipsheets, including:– Bill Collection and Debt Repayment

– What Creditors Can Do If You Don’t Pay

– Your Credit Report

• Other resources:– Identity theft resources

– Reality Choices (young adults)

– Payday Loan Calculator

Contact Information

Darren Thomas

Director of Fair Trading (as delegated)

Phone: 780 422 8046

Fax: 780 427 3033

Email: darren.thomas@gov.ab.ca