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The Fair Trading Act and Credit 2011 Service Alberta.

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Presentation on theme: "The Fair Trading Act and Credit 2011 Service Alberta."— Presentation transcript:

1 The Fair Trading Act and Credit 2011 Service Alberta

2 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.

3 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.

4 Credit related FTA Regulations Collection and Debt Repayment Practices Regulation Cost of Credit Disclosure Regulation Credit and Personal Reports Regulation Payday Loans Regulation

5 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)

6 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

7 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.

8 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.

9 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.

10 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

11 Contact Information Darren Thomas Director of Fair Trading (as delegated) Phone: 780 422 8046 Fax: 780 427 3033 Email:

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