Acts and Regulations

2010-104 - General

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Current to 1 January 2024
NEW BRUNSWICK
REGULATION 2010-104
under the
Cost of Credit Disclosure and Payday Loans Act
(O.C. 2010-359)
Filed July 5, 2010
Under section 62 of the Cost of Credit Disclosure Act, the Lieutenant-Governor in Council makes the following Regulation:
1
DEFINITIONS AND APPLICATION
Citation
1This Regulation may be cited as the General Regulation - Cost of Credit Disclosure Act.
Definitions
2(1)In this Regulation, “Act” means the Cost of Credit Disclosure Act.
2(2)In the Act and this Regulation, “mortgage loan” means a loan of money secured by a charge against real property.
2(3)In the Act, “high-ratio mortgage” means a mortgage loan under which the amount advanced, together with the amount outstanding under any other mortgage that ranks equally with or in priority to the mortgage loan, exceeds 75% of the market value of the relevant real property.
Non-application of Act
3(1)The following definitions apply in this section.
“owner of a public utility” means a person who owns, operates, manages or controls a public utility.(propriétaire d’une entreprise de service public)
“public utility” means equipment or facilities used to provide any of the following services, either directly or indirectly, to or for the public: (entreprise de service public)
(a) the transmission, emission, reception or conveyance of information by any telecommunication system;
(b) the supply, transmission or distribution of electricity or water or of oil, gas or other hydrocarbons;
(c) the collection, disposal or treatment of garbage; or
(d) the collection, disposal or treatment of sewage.
3(2) The Act does not apply to a credit agreement in relation to
(a) the sale of a service by the owner of a public utility,
(b) a loan, by an insurer licensed under the Insurance Act, made under a life insurance policy to the insured or the insured’s assignee solely on the security of the cash surrender value of the policy,
(c) a loan made under the Youth Assistance Act, the Post-Secondary Student Financial Assistance Act, the Canada Student Financial Assistance Act (Canada) or the Canada Student Loans Act (Canada),
(d) the payment of taxes under an Act of the Legislature, or
(e) overdraft protection on a deposit account.
2
REGISTRATION
Fees for registration
Repealed: 2022-54
2022-54
4Repealed: 2022-54
2022-54
Period for which registration in effect
5For the purposes of section 8 of the Act, the registration of a credit grantor, lessor or credit broker remains in effect for one year.
Certificates of registration
6(1)If the Director registers a credit grantor, lessor or credit broker under subsection 7(1) of the Act, the Director shall issue a certificate of registration to the credit grantor, lessor or credit broker and to each of the branch offices of the credit grantor, lessor or credit broker.
6(2)A certificate of registration shall be kept on the premises designated on the certificate at all times.
2013, c.31, s.12
Withdrawal of registration
7(1)A credit grantor, lessor or credit broker may withdraw its registration at any time by sending a notice of intention to withdraw to the Director by registered mail and returning the certificate of registration or, if there is one or more branch offices, the certificates of registration.
7(2)A credit grantor, lessor or credit broker may withdraw its registration with respect to one or more branch offices at any time by sending a notice of intention to withdraw to the Director by registered mail and returning the certificate of registration of each branch office with respect to which the withdrawal applies.
2013, c.31, s.12
Notification of suspension or cancellation of registration and return of certificates of registration
8(1)If the Director suspends the registration of a credit grantor, lessor or credit broker under subsection 11(1) of the Act or cancels the registration under that subsection or under paragraph 13(b) or (c) of the Act, the Director shall notify the credit grantor, lessor or credit broker by registered mail.
8(2)On receipt of the notification of suspension or cancellation under subsection (1), the credit grantor, lessor or credit broker shall without delay forward to the Director the certificate of registration or, if there is one or more branch offices, the certificates of registration.
8(3) If the Director suspends or cancels the registration of a credit grantor, lessor or credit broker with respect to one or more branch offices under subsection 11(2) of the Act, the Director shall notify the credit grantor, lessor or credit broker by registered mail.
8(4)On receipt of the notification of suspension or cancellation under subsection (3), the credit grantor, lessor or credit broker shall without delay forward to the Director the certificate of registration of each branch office with respect to which the suspension or cancellation applies.
2013, c.31, s.12
3
COLLECTION AND RECOVERY OF DEBT
Prohibited collection practices
9(1)This section applies to a credit grantor or lessor who is collecting or attempting to collect a debt.
9(2)No credit grantor or lessor shall
(a) communicate or attempt to communicate with a borrower or lessee, any member of the borrower’s or lessee’s family or household, any relative, neighbour, friend or acquaintance of the borrower or lessee, or the borrower’s or lessee’s employer or guarantor, by any means, in such a manner or with such frequency as to constitute harassment, including, but not limited to,
(i) using threatening, profane, intimidating or coercive language,
(ii) using undue, excessive or unreasonable pressure, or
(iii) making public or threatening to make public a borrower’s or lessee’s failure to pay the debt,
(b) subject to paragraphs (c) and (d), communicate or attempt to communicate with any person other than the borrower or lessee for any purpose in relation to the debt or the borrower or lessee,
(c) except with the approval of the borrower or lessee, communicate or attempt to communicate with him or her or any other person at the place of employment of the borrower or lessee for any purpose in relation to the debt or the borrower or lessee,
(d) except on the request of the person being contacted, make a telephone call to, or a personal call on, a borrower or lessee, any member of the borrower’s or lessee’s family or household, any relative, neighbour, friend or acquaintance of the borrower or lessee, or the borrower’s or lessee’s employer or guarantor,
(i) on a Sunday, other than between 1 p.m. and 5 p.m. local time for the person being contacted,
(ii) on a holiday other than a Sunday, or
(iii) on any other day, other than between the hours of 7 a.m. and 9 p.m. local time for the person being contacted,
(e) communicate or attempt to communicate with a borrower or lessee or any other person for any purpose in relation to the debt or the borrower or lessee by a means that enables the charges or costs of the communication to be payable by the borrower or lessee or other person,
(f) directly or indirectly threaten or state an intention to commence any legal proceeding for which there is no lawful authority,
(g) commence a legal proceeding for the recovery of the debt before having provided the borrower or lessee with written notice that the credit grantor or lessor intends to commence the proceeding,
(h) give, directly or indirectly, any false or misleading information in respect of the debt or the collection of the debt,
(i) misrepresent the purpose of a communication with any person or the identity of the credit grantor or lessor,
(j) use, without lawful authority, any summons, notice, demand or other document that suggests or implies a connection with any court within or outside Canada,
(k) communicate or attempt to communicate with the borrower or lessee, by any means, with respect to the collection of the debt, without indicating
(i) the name of the credit grantor or lessor, as shown on its certificate of registration, and
(ii) the balance owing on the account, or
(l) collect or attempt to collect money from a person who is not liable for the debt.
4
CALCULATIONS
APR for certain credit agreements, including typical mortgage loans
10If the stated interest rate for a credit agreement is calculated yearly or half-yearly, but not in advance, the APR is the discount rate, calculated yearly or half-yearly, but not in advance, expressed as an annual percentage, such that the sum of the present values of all anticipated advances equals the sum of the present values of all anticipated payments.
When the APR is the annual interest rate
11The APR for a credit agreement is the annual interest rate stated in the credit agreement if
(a) there are no non-interest finance charges payable by the borrower under the credit agreement,
(b) the same interest rate will apply for the whole term, or would apply for the whole term using the assumption set out in subsection 15(3),
(c) the term consists of interest compounding periods that are at least as long as the period between required interest payments, and
(d) the stated annual interest rate is a multiple of the interest rate that applies to each interest compounding period.
APR for other credit agreements
12(1)The APR for a credit agreement to which sections 10 and 11 do not apply is calculated in accordance with the following formula:
APR = [C ÷ (T × A)] × 100
where
APR is the annual percentage rate;
Cis the total cost of credit;
Tis the length of the term, in years; and
Ais the average of the principal outstanding at the end of each interest calculation period during the term before applying any payment due by the borrower.
12(2)In calculating “A”, the following rules apply:
(a) the principal outstanding at the beginning of the term is the result obtained by subtracting the total of all payments made by the borrower at or before the beginning of the term from the total of all advances received by the borrower at or before the beginning of the term;
(b) the term is divided into interest calculation periods of equal length;
(c) the cost of credit for each interest calculation period is calculated in accordance with the following formula:
C = (APR ÷ 100) × L × P
where
C is an amount equal to the cost of credit for each interest calculation period;
APR is the annual percentage rate;
L is the length of the interest calculation period expressed as a fraction of a year; and
P is the principal outstanding at the end of the interest calculation period before applying any payment due by the borrower;
(d) the principal does not include any portion of the cost of credit, and no portion of the accumulated cost of credit is included in the principal outstanding at any time;
(e) each payment by the borrower under the credit agreement is applied first against the accumulated cost of credit and then, to the extent that the payment exceeds the accumulated cost of credit, against the principal outstanding.
Rebates
13If a borrower must decline a rebate, or a portion of a rebate, in order to enter into a credit agreement at a particular interest rate, the APR and the total cost of credit are calculated on the assumption that the value received or to be received by the borrower is the cash price of the product, as determined without regard to the rebate, less the amount of the declined rebate or portion of a rebate.
APR and implicit finance charge for leases
14(1)The APR for a lease is calculated in accordance with the following formula:
APR = M × I × 100
where
APR is the annual percentage rate;
M is the number of payment periods in a year under the lease; and
I is the periodic interest rate, as determined under subsection (2).
14(2)The periodic interest rate is the value of “I” in the following formula:
where
PMTis the amount of each periodic payment under the lease;
Ais the number of periodic payments under the lease that are made at or before the beginning of the term;
PVis the capitalized amount;
FVis the amount of the assumed residual payment;
Iis the periodic interest rate; and
Nis the number of payment periods under the lease.
14(3)For the purposes of calculating the APR and implicit finance charge for a lease,
(a) an amount payable by the lessee in respect of a tax is regarded as a payment only if an amount in respect of the tax was treated as an advance in calculating the capitalized amount, and
(b) a charge payable by the lessee is regarded as an advance only if an equivalent charge would be payable by a cash customer.
14(4)If there is any irregularity in the amount or timing of payments required during the term, the equation in subsection (2) shall be modified as necessary to calculate the value of “I” in accordance with actuarial principles.
14(5)For the purposes of calculating the APR and implicit finance charge for a lease referred to in paragraph (b) of the definition “lease” in subsection 1(1) of the Act, the term of the lease is assumed to be one year.
Assumptions and tolerances
15(1)In calculating the APR for a credit agreement or lease, a year is considered to have 365 days.
15(2)If a credit agreement or lease provides for payments to be made at intervals measured by reference to weeks or months, the APR may be calculated on the assumption that each week is 1/52 of a year long and each month is 1/12 of a year long.
15(3)If the APR for a credit agreement or lease is required to be calculated when the interest rate for any period during the term is unknown, the APR or any other value that depends on the interest rate must be calculated as if the interest rate for that period was to be determined on the basis of the circumstances existing at the time of the calculation.
15(4)If a credit agreement for fixed credit does not provide for scheduled payments by the borrower, the APR must be calculated on the assumption that the principal outstanding will be repaid in a single payment one year after the effective date of the relevant disclosure statement.
15(5)The APR and the total cost of credit for a renewed credit agreement must be calculated on the assumption that the borrower receives, on the renewal date, an advance equal to the outstanding balance at the end of the term of the agreement being renewed.
15(6)A disclosure of an APR for a credit agreement or lease is considered to be accurate if it is within 1/8 of 1% of the APR calculated in accordance with this Regulation.
Refund calculation
16For the purposes of subsection 23(4) of the Act, the portion of each non-interest finance charge that must be refunded or credited to the borrower is the amount calculated in accordance with the following formula:
P = C × [(N – M) ÷ N]
where
Pis the portion of the charge to be refunded or credited to the borrower;
Cis the amount of the charge;
Nis the length of the period between the time the charge was imposed and the scheduled end of the term of the credit agreement; and
Mis the length of the period between the time the charge was imposed and the time of the repayment.
Lessee’s maximum liability - residual obligation lease
17(1)The lessee’s maximum liability at the end of the term of a residual obligation lease after returning the leased goods to the lessor is calculated in accordance with the following formula:
M = P + (V − R)
where
Mis the maximum liability;
Pis the estimated residual cash payment;
Vis the estimated residual value; and
Ris the realizable value of the leased goods, as determined under subsections (2) and (3).
17(2)Subject to subsection (3), the realizable value of leased goods at the end of the term of the lease is the greater of
(a) the net proceeds obtained by the lessor when the lessor disposes of the goods,
(b) 80% of the estimated residual value, and
(c) the estimated residual value less 3 times the average monthly payment.
17(3)If the amount determined under paragraph (2)(a) is less than the amount determined under paragraph (2)(b) or (c), the realizable value is reduced according to the extent that the difference in the amounts is attributable to unreasonable or excessive wear or use, or to damage to the goods for which the lessee is responsible under the lease.
5
GENERAL
Waiver of time period referred to in subsection 16(3) of Act
18(1)A borrower may waive the time period for delivery of a disclosure statement referred to in section 16(3) of the Act if
(a) the borrower has received independent legal advice regarding the effect of the waiver and a statement to that effect, signed by the lawyer providing the advice, is attached to the waiver,
(b) the mortgage loan to which the waiver relates provides the borrower with prepayment rights that are at least as favourable to the borrower as those provided by section 23 of the Act for credit agreements that are not in relation to mortgage loans, or
(c) any obligation to which paragraph 16(3)(a) of the Act applies will be extinguished and any payment to which paragraph 16(3)(b) of the Act applies will be refunded to the borrower by the credit grantor if the borrower notifies the credit grantor within 2 business days after receiving the disclosure statement that the borrower intends to withdraw from or does not intend to enter into the credit agreement.
18(2)The waiver is effective only if
(a) it is in writing and signed by the borrower, and
(b) in the case of a waiver under paragraph (1)(c), the waiver document clearly and prominently discloses the borrower’s rights referred to in paragraph (1)(c).
Acceleration clause
19(1)In this section, “acceleration clause” means a clause in a credit agreement that provides that, on default by the borrower or in any other circumstance provided by the credit agreement, the credit grantor may accelerate payment by the borrower so as to require repayment of the whole or part of the outstanding balance of the credit agreement.
19(2)Subject to subsection (4), if a credit grantor wishes to accelerate payment by the borrower in accordance with an acceleration clause, the credit grantor shall provide written notice to the borrower of the credit grantor’s intention to accelerate payment.
19(3)The notice
(a) shall be delivered personally to the borrower or be sent by registered mail to the last known address of the borrower, and
(b) shall contain
(i) a description of the default by the borrower or other circumstance giving rise to the right to accelerate payment, and
(ii) a statement that, unless the default or other circumstance is remedied within 10 business days after notice was delivered or sent under paragraph (a), the whole of the outstanding balance or part of the outstanding balance, as the case may be, will become due and payable.
19(4)Despite anything to the contrary in a credit agreement, the whole or part of the outstanding balance does not become due and payable if
(a) notice is not provided in accordance with this section, or
(b) the default or other circumstance is remedied within the period referred to in subparagraph (3)(b)(ii).
19(5)Subsection 19(2) of the Act does not apply to a notice referred to in subsection (2).
19(6)This section does not apply in respect of credit agreements in relation to mortgage loans or in respect of credit agreements entered into before the commencement of this subsection.
Commencement
20This Regulation comes into force on September 15, 2010.
N.B. This Regulation is consolidated to September 1, 2022.