On April 1, 2020, Regulations Amending Certain Department of Finance Regulations (Miscellaneous Program): SOR/2020-47 (Regulations) were issued. The Regulations amend certain regulations to the Bank Act, the Insurance Companies Act and the Trust and Loan Companies Act.
What you need to know
- The objective of these amendments is to: a) correct discrepancies between French and English versions; b) add clarity to regulatory provisions; and c) correct typographical or grammatical errors.
- Although changes are being made to certain consumer regulations under the Bank Act, a new set of regulations is expected to be introduced to complement the new consumer framework introduced by Bill C-86.
Overview of amendments
The Department of Finance’s Regulatory Impact Analysis Statement notes that the rationale for the amendments set forth in the Regulations is to respond to issues raised by the Standing Joint Committee for Scrutiny of Regulations (SJCR) respecting provisions in various financial consumer protection regulations. The concerns of the SJCR gave way to the following objectives of the amendments:
- to correct discrepancies between the French and English versions;
- to add clarity to regulatory provisions; and
- to correct typographical or grammatical errors.
In light of these objectives, the amendments set forth in the Regulations generally fall into three categories:
1. Amendments that address vague or ambiguous language
Examples of such amendments are as follows:
- Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations: The term “without delay” will be removed from the regulations, on the basis that it is vague and ambiguous and that it is implied that obligations imposed upon banks should be undertaken in a timely fashion unless a specific time limit is prescribed. In light of the concerns that “without delay” is an ambiguous term, Finance Canada also indicated that the following regulations will need to be amended accordingly: Complaints Regulations, Cost of Borrowing Regulations, Negative Option Billing Regulations and Principal Protected Notes Regulations.
We note that, notwithstanding the Department of Finance’s observation that the term “without delay” is vague and ambiguous, certain amendments to the Bank Act in Bill C-86 maintain this language from existing legislation and regulations, so the expectation is that this term will nonetheless be carried over into the new framework. For example, Bill C-86 contains a requirement in section 627.08(2) for an institution to provide a written confirmation of an oral consent without delay, a requirement in section 627.1(2) for an institution to acknowledge receipt of cancellation of an agreement in writing and without delay, and a requirement in section 627.34(1) for a credit card statement to be sent without delay after the last day of the billing cycle.
- Cost of Borrowing Regulations: The requirement to disclose information such that “sufficient white space is provided around the text” will be amended, on the basis that it is vague and ambiguous, to align with other similar requirements in the same regulation by removing the word “sufficient”, so that text must be clearly visible.
- Principal Protected Notes Regulations: The requirement for banks to disclose to consumers “any other information that could reasonably be expected to affect an investor’s decision to purchase the note” will be removed from the regulations on the basis that it is vague and ambiguous. We note that, while this requirement was repealed from the Principal Protected Notes Regulations, it will be transferred into the Bank Act pursuant to Bill C-86 (section 627.78(1)(j)).
2. Amendments that reduce duplication between a regulatory provision and its enabling legislative authority
An example of such amendments is as follows:
- Electronic Documents Regulations: The requirements related to a consumer’s ability to access and retain a copy of electronic documents in which the consumer has provided their consent to receive electronic documents is duplicative of the same requirement found in the enabling legislation. Therefore, such requirements will be removed from these regulations.
3. Amendments that would improve consistency between the French and English versions of these regulations
An example of such amendments is as follows:
- Electronic Documents Regulations: The requirement for electronic documents to be retained for a period of time is present in the English version of the regulations but is missing from the French version. The French version will therefore be amended to be consistent with the English version.
Applicability to Bill C-86
Although changes are being made to certain consumer regulations under the Bank Act, a new set of regulations is expected to be introduced to complement the new consumer framework introduced by Bill C-86 (and ultimately replace the existing consumer regulations). The regulations necessary to implement the new financial consumer protection framework found in Bill C-86 are not included in these Regulations.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
For permission to republish this or any other publication, contact Janelle Weed.
© 2021 by Torys LLP.
All rights reserved.