The Fair Trading Act and Credit
2011
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