High-Cost Credit Products Regulation

High-Cost Credit Products Regulation, M.R. 7/2016 The Consumer Protection Act , C.C.S.M. c. C200 Regulation 7/2016 Registered January 8, 2016 bilingual version (HTML) Table of Contents Section 1 Definitions 2 High-cost credit product — loan of money 3 High-cost credit product — line of credit 4 Exempt credit products 5 Exempt credit grantors 6 Fee for licence 7 Additional information required for licence application 8 Licence conditions 9 Information to be included 10 Forms to accompany high-cost credit agreement 11 Information to be included in high-cost credit agreement 12 Pages that must be signed by the borrower 13 Requesting additional copy of the agreement 14 Discounting prohibited 15 Restricted high-cost credit product lending activities 16 Accessing funds 17 No repeated attempts to process repayment 18 Using information about a borrower 19 Assisting unlicensed high-cost credit grantors 20 Requirements for entrance sign 21 Repayment 22 Records must be complete and accurate 23 Records retention period 24 Name and licence to be prominently displayed 25 Design requirements 26 Borrower must be able to print or store agreement 27 Consent to enter an Internet high-cost credit agreement 28 Repayment when cancelling 29 Notice of administrative penalty 30 Coming into force Schedule INTERPRETATION Definitions 1(1) The following definitions apply in this regulation. "Act" means The Consumer Protection Act . («  Loi ») "cash card" means a card or other device issued to a borrower to enable him or her to access the funds available under the high-cost credit agreement. (« carte de paiement ») "high-cost credit fee" means a fee, charge, penalty or other amount, including any of the amounts referred to in items 6(a) to (h) of subsection 249(2) of the Act, that is or may be payable by a borrower to a high-cost credit grantor or third party under a high-cost credit agreement. (« frais relatifs au crédit à coût élevé ») "High-Cost Credit Products Part" means Part XXV (High-Cost Credit Products) of the Act. (« partie concernant les produits de crédit à coût élevé ») "information disclosure document" means the document referred to in section 249 of the Act. (« document d'information ») "Internet high-cost credit agreement" means a high-cost credit agreement that is formed between a borrower and a high-cost credit grantor by Internet communications or by a combination of Internet and fax communications. (« contrat de crédit à coût élevé par Internet ») "Internet high-cost credit product" means a high-cost credit product that is made available by way of an Internet high-cost credit agreement. (« produit de crédit à coût élevé par Internet ») "line of credit" includes a credit product of a similar nature to a line of credit. (« marge de crédit ») "loan" includes a loan of money that may occur in the future. (« prêt ») "Schedule" means the schedule to this regulation. (« annexe ») 1(2) For the purposes of the High-Cost Credit Products Part and this regulation, each of the following is a type of high-cost credit product: (a) a loan of money that meets the requirements referred to in subsection 2(1) (annual interest rate); (b) a loan of money that meets the requirements referred to in subsection 2(2) (interest and high-cost credit fees); (c) a loan of money that meets the requirements referred to in subsection 2(3) (secured personal property); (d) a line of credit that meets the requirements referred to in subsection 3(1) (annual interest rate); (e) a line of credit that meets the requirements referred to in subsection 3(2) (interest, fees and conditions); (f) a line of credit that meets the requirements referred to in subsection 3(3) (secured personal property). HIGH-COST CREDIT PRODUCTS High-cost credit product — loan of money 2(1) For the purpose of clause (a) of the definition "high-cost credit product" in section 237 of the Act, the following criterion is prescribed: Annual interest rate 1. The high-cost credit agreement terms include an annual interest rate that exceeds 32%. 2(2) For the purpose of clause (a) of the definition "high-cost credit product" in section 237 of the Act, the following criteria are prescribed: Interest and fees 1. The principal loan amount is no more than $5,000. 2. The high-cost credit agreement terms include the following: (a) the payment of interest at a rate of up to 32% and one or more high-cost credit fees; (b) the repayment of the loan over a term not exceeding two years. 3. The loan is not secured by any personal property pledged as collateral. 2(3) For the purpose of clause (a) of the definition "high-cost credit product" in section 237 of the Act, the following criteria are prescribed: Secured personal property 1. The loan is secured by personal property that is pledged as collateral. 2. A security interest in the personal property is registered under The Personal Property Security Act . 3. The loan proceeds are not used to purchase that secured personal property. 4. The high-cost credit agreement terms include the payment of one or more high-cost credit fees. High-cost credit product — line of credit 3(1) For the purpose of clause (b) of the definition "high-cost credit product" in section 237 of the Act, the following criterion is prescribed: Annual interest rate 1. The high-cost credit agreement terms include an annual interest rate that exceeds 32%. 3(2) For the purpose of clause (b) of the definition "high-cost credit product" in section 237 of the Act, the following criteria are prescribed: Interest, fees and conditions 1. The credit limit does not exceed $5,000. 2. The high-cost credit agreement includes one or more of the following terms: (a) the borrower is or may be required to pay the high-cost credit grantor or a third party one or more high-cost credit fees; (b) the borrower must first receive authorization, permission or approval from the high-cost credit grantor or a third party to access the funds, whether or not there is a charge for receiving the authorization or accessing the funds; (c) the borrower must repay the principal amount or any other amount on a schedule that corresponds or is linked in any other manner to the days on which the borrower is regularly due to receive income; (d) the repayment amount in any 30-day period includes one or more repayments totalling at least 10 percent of each advance or outstanding balance of the principal. 3. The line of credit is not secured by any personal property pledged as collateral. 3(3) For the purpose of clause (b) of the definition "high-cost credit product" in section 237 of the Act, the following criteria are prescribed: Secured personal property 1. The line of credit is secured by personal property that is pledged as collateral. 2. A security interest in the personal property is registered under The Personal Property Security Act . 3. The funds advanced through the line of credit are not used to purchase that secured personal property. 4. The high-cost credit agreement terms include the payment of one or more high-cost credit fees. Exempt credit products 4(1) For the purpose of clause (e) of the definition "high-cost credit product" in section 237 of the Act, the term "mortgage" does not include a mortgage on personal property. 4(2) For the purpose of clause (f) of the definition "high-cost credit product" in section 237 of the Act, the following products are prescribed as credit products that do not fall within the meaning of that definition: (a) a credit card; (b) a margin loan. EXEMPT HIGH-COST CREDIT GRANTORS Exempt credit grantors 5 The High-Cost Credit Products Part does not apply to a high-cost credit grantor that is a corporation without share capital carrying on its activities without pecuniary gain for its members. LICENCE Fee for licence 6 The fee payable for a high-cost credit grantor licence or a renewal of a licence for one year or part of a year is $5,500. Additional information required for licence application 7 For the purpose of clause 242(3)⁠(c) of the Act, an applicant for a licence must provide the following to the director: (a) a sample completed information disclosure document that meets the requirements of section 249 of the Act for each type of high-cost credit product proposed to be offered, arranged or provided by the applicant; (b) a sample completed high-cost credit agreement for each type of high-cost credit product proposed to be offered, arranged or provided by the applicant; (c) the name of an officer or employee who resides in Manitoba and who is authorized to provide information requested by the director and to receive and disseminate information given by the director; (d) a detailed description of each optional good or service that is or may be offered to a borrower; (e) if the applicant is a corporation, an indication as to whether or not the applicant has active registration status under The Corporations Act . Licence conditions 8(1) A high-cost credit grantor licence is subject to the following conditions: 1. The high-cost credit grantor must notify the director in writing within 14 days of the following changes: (a) any change to the name, address or other information (i) set out in the application form, or (ii) required under section 242 of the Act or section 7 of this regulation; (b) any change to the operation of the business of a high-cost credit grantor that affects or is likely to affect the offering, arranging or providing of a high-cost credit product. 2. If the high-cost credit grantor holds a licence to lend money or extend credit in any other jurisdiction, the credit grantor must immediately notify the director when it is suspended or cancelled. 3. The high-cost credit grantor must be familiar with and must comply with Manitoba's consumer protection legislation for high-cost credit products. 8(2) A high-cost credit grantor must prominently display its licence at the location specified in the licence. 8(3) A licensed high-cost credit grantor must not represent, either expressly or by implication, that its licence is an endorsement or approval of the high-cost credit grantor by the government. INFORMATION DISCLOSURE DOCUMENT Information to be included 9(1) For the purpose of subsection 249(2) of the Act, the information disclosure document must include a statement that any consent to a personal investigation as defined in The Personal Investigations Act must be given in writing, including by electronic means, but not orally. 9(2) The time period prescribed for the purpose of item 4(b) of subsection 249(2) of the Act is 30 days. 9(3) The following fees are prescribed for the purpose of item 6(h) of subsection 249(2) of the Act: (a) any fee to prepare a document for a high-cost credit agreement; (b) any fee relating to the secured personal property; (c) any fee to refinance, restructure or change the terms of a high-cost credit agreement. 9(4) A fee for a cheque, pre-authorized debit or other negotiable instrument that is dishonoured or upon which a stop-payment order is placed is not a high-cost credit fee. HIGH-COST CREDIT AGREEMENTS Forms to accompany high-cost credit agreement 10 At the same time that a high-cost credit grantor gives the borrower the documents referred to in subsection 250(2) of the Act, the high-cost credit grantor must also give the borrower the following forms set out in the Schedule: (a) the cancellation notice form; (b) the receipt acknowledgement form. Information to be included in high-cost credit agreement 11(1) For each type of high-cost credit agreement it offers, arranges or provides, a high-cost credit grantor must include on the first page of the high-cost credit agreement the following information: (a) the high-cost credit grantor's business name as shown on its licence, its trademark, tradename or logo and its licence number; (b) the high-cost credit grantor's business and mailing address, e-mail address, and telephone and fax numbers; (b.1) the borrower's name, address and telephone number; (c) the principal amount of the loan or the amount of the funds available, whichever is applicable; (d) if applicable, the term of the high-cost credit agreement; (e) if applicable, the amount of the initial advance or draw; (f) the total cost of credit; (g) the APR; (h) the annual interest rate; (i) each high-cost credit fee that will or may be payable to the high-cost credit grantor or any third party; (j) a notation of each difference, if any, between the information set out in the information disclosure document and the high-cost credit agreement; (k) the date and time that the high-cost credit agreement is entered into; (l) if applicable, the date and time that a cash card is given to the borrower. 11(2) Subject to section 12, the high-cost credit grantor must not include any information or markings other than the information set out in subsection (1) on the first page of the high-cost credit agreement. M.R. 88/2016 Pages that must be signed by the borrower 12(1) A high-cost credit grantor must (a) provide a signature line for the borrower on each page of the high-cost credit agreement that includes information that is required to be provided by the Act and this regulation; and (b) ensure that the borrower signs each page on which a signature line appears. 12(2) A high-cost credit grantor is not prohibited from requiring a borrower to sign any additional pages of the high-cost credit agreement. Requesting additional copy of the agreement 13(1) In addition to any copy of a document required to be given to a borrower under subsection 250(2) of the Act, a borrower may request, orally or in writing, an additional copy of each document that comprises the entire agreement. 13(2) The high-cost credit grantor must provide or mail the requested copy to the borrower within one business day of the request. 13(3) The high-cost credit grantor must not charge a fee for the first additional copy requested if the request is made within one year after the end of the term of the high-cost credit agreement. PROHIBITIONS AND OBLIGATIONS Discounting prohibited 14 A high-cost credit grantor must not discount the principal amount of the high-cost credit product by deducting or withholding from any advance or draw an amount representing any portion of the cost of credit or any component of the cost of credit. Restricted high-cost credit product lending activities 15 A high-cost credit grantor must not do any of the following: (a) accept a cheque, pre-authorized debit or other negotiable instrument from a borrower unless it is made payable to the high-cost credit grantor; (b) make or attempt to make any unauthorized withdrawal from a borrower's account; (c) disclose any information about the high-cost credit agreement or the fact that the borrower has entered into a high-cost credit agreement with the high-cost credit grantor to any person other than the borrower unless (i) the borrower gives his or her written and informed consent to the disclosure, (ii) the disclosure is to a personal reporting agency, as defined in The Personal Investigations Act , (iii) the disclosure is to a collection agent with whom the high-cost credit grantor has contracted to collect a debt owing under the high-cost credit agreement, or (iv) the disclosure is required by law; (d) state or imply that entering into a high-cost credit agreement will improve the borrower's personal credit rating if that is not accurate or correct; (e) give, offer to give, or promise to give directly or indirectly any prize or reward (i) as an incentive or enticement to enter into a high-cost credit agreement, or (ii) for entering into a high-cost credit agreement. Accessing funds 16(1) If the high-cost credit agreement terms provide for (a) an initial advance or draw on the funds; or (b) one advance of the entire amount of the funds; a high-cost credit grantor must ensure that the funds are made available to the borrower immediately after the high-cost credit agreement is entered into. 16(2) If a cash card is required to enable the borrower to access the funds available under a high-cost credit agreement, the high-cost credit grantor must provide that card to the borrower immediately after the agreement is entered into. No repeated attempts to process repayment 17 A high-cost credit grantor may (a) present a cheque, pre-authorized debit or other negotiable instrument that the borrower provided in exchange for each regularly scheduled payment; or (b) initiate an electronic fund transfer for the purpose of processing a regularly scheduled payment; more than once but only if the borrower is not charged a fee, penalty or other amount to process it or attempt to process it. Using information about a borrower 18(1) A high-cost credit grantor may use information about a borrower only for the purpose of providing a high-cost credit product to the borrower, administering a high-cost credit agreement, collecting any repayment or providing insurance. The high-cost credit grantor must not use that information for any other purpose including to provide or offer to provide any other good or service sold in relation to a high-cost credit product to the borrower. 18(2) If a borrower provides a pre-authorized debit in exchange for the advance of or draw on funds under a high-cost credit agreement, the high-cost credit grantor may use information about the borrower's account only to access the account for the purposes of the borrower's repayment. Assisting unlicensed high-cost credit grantors 19(1) A high-cost credit grantor must not assist or allow any other person to assist a person who does not have a valid licence issued under the Act to offer, arrange, or provide a high-cost credit product (referred to in subsection (2) as "an unlicensed person") by any means, including by way of the Internet. 19(2) Without limiting subsection (1), a high-cost credit grantor must not do any of the following: (a) make available to a potential borrower any information about a high-cost credit product offered, arranged or provided by an unlicensed person; (b) make available to a potential borrower any equipment or other means of access by which information may be obtained about a high-cost credit product offered, arranged or provided by an unlicensed person; (c) assist a potential borrower in obtaining a high-cost credit product offered, arranged or provided by an unlicensed person; (d) assist a borrower in accessing funds provided through a high-cost credit product by an unlicensed person; (e) assist a borrower in making a repayment, in whole or in part, of a high-cost credit product arranged or provided by an unlicensed person, including by providing or debiting a cash card for this purpose. Requirements for entrance sign 20 For the purpose of section 251 of the Act, a high-cost credit grantor must post at each licensed location a sign for each type of high-cost credit product offered, arranged or provided by the credit grantor at that location that (a) measures not less than 61 cm in width and 76 cm in height; (b) meets the requirements in subsection 251(3) of the Act; and (c) is visible to a borrower upon entering the location. Repayment 21(1) For the purpose of clause 252(4)⁠(b) of the Act, the following are prescribed: (a) electronic fund transfer; (b) bank draft. 21(2) If an advance or draw is delivered electronically, the borrower may make a repayment under a high-cost credit agreement by authorizing the electronic transfer of the repayment amount to the high-cost credit grantor. Records must be complete and accurate 22 A high-cost credit grantor must keep and maintain records that are complete and accurate and that enable the following to be determined and verified: (a) the information set out in the information disclosure document; (b) the provision of the information disclosure document and other documents as required by subsection 250(2) of the Act; (c) the particulars of each high-cost credit agreement entered into by the high-cost credit grantor; (d) if applicable, each registration of an interest in personal property under The Personal Property Security Act ; (e) the particulars about the collection practices of the high-cost credit grantor in respect of each high-cost credit agreement, including a communications log of each contact or attempted contact with each borrower; (f) the particulars of each notice of cancellation received and each repayment of a cancelled high-cost credit agreement. Records retention period 23 A high-cost credit grantor must retain its records for at least three years after the date that the high-cost credit agreement expires or is terminated. INTERNET HIGH-COST CREDIT PRODUCTS Name and licence to be prominently displayed 24 If a high-cost credit grantor offers, arranges or provides an Internet high-cost credit product, the credit grantor must prominently display its name as shown on its licence, its licence number and the licence expiry date at or near the top of the introductory page of the website or mobile application for borrowers in Manitoba. Design requirements 25(1) A high-cost credit grantor who offers, arranges or provides Internet high-cost credit products to borrowers in Manitoba through a website or mobile application must (a) post the information referred to in subsection 251(3) of the Act in a visible location at or near the top of the introductory page or screen; (b) use a white background and a purple border on the user interface; and (c) display the required information in a contrasting font colour. 25(2) Before a borrower enters into an Internet high-cost credit agreement, the high-cost credit grantor must ensure that its website or mobile application is designed in a manner (a) that indicates in a clear, understandable and prominent manner that the prospective borrower's action or actions will result in the entering into of an agreement with the credit grantor; and (b) that makes the agreement accessible to the prospective borrower so that he or she is able to acknowledge and accept the terms and conditions of the agreement. 25(3) Clause 249(6)⁠(b) of the Act does not apply to a high-cost credit grantor who enters into an Internet high-cost credit agreement if the credit grantor complies with this section. Borrower must be able to print or store agreement 26 After an Internet high-cost credit agreement is entered into, the high-cost credit grantor must ensure that, for the term of the agreement, its website or mobile application is designed and maintained in such a manner that it allows the borrower to print or store a copy of the agreement. Consent to enter an Internet high-cost credit agreement 27(1) A high-cost credit grantor must ensure that the borrower has consented to the entering into of the Internet high-cost credit agreement and must make a record evidencing that consent (a) before providing any advance to the borrower; or (b) if the high-cost credit product is a line of credit, at the time the agreement is entered into. 27(2) Section 12 does not apply to a high-cost credit grantor who enters into an Internet high-cost credit agreement if the credit grantor makes a record evidencing the consent of the borrower to the entering into of the agreement before the funds are made available to the borrower. Repayment when exercising cancellation right 28 In the case of an Internet high-cost credit agreement, the authorization of an electronic withdrawal by the borrower is a prescribed manner of repayment for the purpose of clause 252(4)⁠(b) of the Act. ADMINISTRATIVE PENALTY Notice of administrative penalty 29(1) A notice of administrative penalty may be issued under subsection 136(1) of The Consumer Protection Act if a person fails to comply with any of the following provisions of the High-Cost Credit Products Part: (a) subsection 241(1) (licence required); (b) subsection 241(2) (use of name); (c) subsection 249(1) (information for borrower); (d) section 251 (posting signs); (e) subsection 252(5) (borrower to be given receipt); (f) subsection 252(8) (refund to borrower on cancellation); (g) subsection 253(1) (no fee on full prepayment of outstanding balance); (h) subsection 253(2) (no fee on partial prepayment of outstanding balance); (i) section 254 (records to be kept). 29(2) A notice of administrative penalty must be in Form 10 of Schedule A of the Consumer Protection Regulation , Manitoba Regulation 227/2006. Coming into force 30 This regulation comes into force on the same day that section 12 of The Consumer Protection Amendment Act (High-Cost Credit Products) , S.M. 2014, c. 12, comes into force. SCHEDULE (Section 10) Notice of cancellation of high-cost credit agreement -->