In January I sent a letter to Minister Anton seeking clarification as to whether or not legislation was going to be introduced to regulate the debt settlement industry. Similar legislation exists in other provinces (e.g. Ontario and Nova Scotia as well as in a number of US States). I received her response in February.
In her response, Minister Anton stated:
“Although I am unable to provide specific details regarding the development or timing of legislation at this time, I can assure you that government is committed to enhancing consumer protections against deceptive practices. To this end, ministry staff continue to work through policy issues that are necessary to regulate debt settlement agencies“
With the introduction of Bill 6, Justice Statutes Amendment Act 2015, the debt settlement industry in BC will now be regulated. This is good news for British Columbians struggling to get themselves out of debt. Today, I spoke strongly in favour or this bill at second reading. Below is the text of my speech.
A. Weaver: I rise to congratulate the government on introducing at least the aspect of this bill that concerned me. That’s with respect to the debt settlement. As the minister will recognize, I contacted her about this earlier this year.
As we know, debt settlement companies typically offer to negotiate on behalf of a consumer lump sum settlements with creditors for amounts significantly less than the consumer’s outstanding debt. Consumers are often required to pay excessive, largely non-refundable fees up front and are encouraged to stop paying their debts and instead save up for a lump sum settlement. This differs from traditional debt-pooling services, which set up reduced-interest repayment plans and assist consumers with eventually paying off their full debts.
Many people are unable to save enough for the lump sum settlement amount and subsequently drop out of the program, losing any money they have already paid to the debt settlement company. There’s no guarantee a creditor will accept the lump sum settlement, although this risk is often not communicated to consumers. This can negatively affect credit scores and further accumulate debt as late fees, missed payments and penalties build up.
The proposed changes, developed with the advice from a debt collection industry advisory group and in consultation with Consumer Protection B.C. would help prevent the negative practices and also modernize outdated provisions to ensure B.C.’s debt collection laws both reflect the present day collection and credit industry and align with other Canadian jurisdictions.
On January 5 of this year, after a rather large number of e-mails I received from people in the greater Victoria district, I contacted the minister and pointed out that in July of 2012 CTV News reported that the Minister of Justice at the time said: “In order to better protect consumers and families living in poverty, the B.C. government will provide legislative changes to regulate businesses that provide debt consolidation services and regulate advance fees paid.”
As I pointed out in the letter, since that time there had been little information from government about when we could expect to see such legislation. I pointed out in that letter on January 5 that debt management companies prey upon some of the most vulnerable British Columbians. Rather than providing a solution to an individual’s debt issue, these companies seek to profit off the situation.
A number of provinces, as I pointed out and as was mentioned by other members here — including Ontario, Alberta, Nova Scotia, Quebec and Prince Edward Island, which I hadn’t realized until a member brought it up recently — have passed similar legislation to end these predative practices within their jurisdictions. At the time I pointed out that I believed it was past time for British Columbia to pass our own regulations in this regard. I asked the minister if she could reply to me with an update as to where we were heading in this direction.
I was delighted to receive a letter from the minister on February 12, which I communicated back to my constituents and others, pointing out that debt collection in British Columbia is regulated under the Business Practices and Consumer Protection Act, pointing out that the legislation was designed to protect consumers by prohibiting deceptive practices and requiring debt industry professionals to be licensed.
At that time, the minister pointed out:
“The emergence of new types of debt repayment professionals has resulted in a need to ensure that they are also bound by the act’s rules. Although I” — being the minister — “am able to provide specific details regarding the development or timing of legislation at this time, I can assure you” — that is, me — “that government is committed to enhancing consumer protections against deceptive practices. To this end, ministry staff continue to work through the policy issues that are necessary to regulate debt settlement industries.”
It is with great pleasure that I stand to see that, in fact, this has entered into Bill 6, the Justice Statutes Amendment Act. I look forward to exploring some of the details further as we get into committee stage. In particular, I have some questions, obviously — and I’m sure other members will too — with respect to 127(3), which talks about a debt repayment: “A debt repayment…must not charge fees or disbursements in excess of the prescribed amount.” We’ll be questioning, obviously, what that prescribed amount may or may not be and what the minister has in mind in terms of subsequent regulations.
I’m also pleased to see that the bill actually does include this entirely new category called the debt repayment agent. It’s very reassuring to see regulations and guidelines put in place as to what a debt repayment agent may or may not do. So with that, I’m very pleased to stand in support of Bill 6, at least the two components that I’ve spent some time working on — the Business Practices and Consumer Protection Act subcomponent as well as Collection Agents and Debt Repayment Agents.
With that, hon. Speaker, I’ll thank you and look forward to committee stage of this bill.
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