Province introducing new regulations for debt settlement companiesFriday, January 04, 2013 by: Kate AdamsMinistry of Consumer Services
Ontario intends to regulate debt settlement companies to protect consumers from exaggerated claims and abusive practices.
Through new regulations, the government will:
• Ban debt settlement companies from charging up-front fees
• Limit the amount of fees consumers are charged
• Require clear, transparent contracts
• Implement a 10-day cooling-off period.
The government has posted regulatory proposals for public comment.
Taking strong action to protect Ontario consumers is part of the McGuinty government’s commitment to educate and protect Ontario families by ensuring a fair, safe and informed marketplace.
“There is evidence of harmful practices used by some debt settlement companies and that is why our government is taking steps to protect consumers. We want to put a stop to abusive practices in the marketplace. Consumers should know their rights before they sign contracts and they should make no payments until they get results.”
--Margarett Best, Minister of Consumer Services
• Ontario is joining other provinces like Alberta, Manitoba and Nova Scotia, which have introduced regulations to crack down on debt settlement companies.
• There are over 20 debt settlement companies operating in Ontario
• The Ontario Association of Credit Counselling Services receives over 100 complaints about debt settlement companies a month.
• Average consumer debt in Ontario is up to $25,447 in the second quarter of 2012, compared to $24,721 in the second quarter of 2011.
• For every dollar Canadians earn, they have $1.64 in unsecured debt: Statistics Canada.