2nd Session, 35th Parliament,
45-46 Elizabeth II, 1996-97

The House of Commons of Canada

BILL C-402

An Act to provide for the limitation of interest rates in relation to credit cards issued by financial institutions, companies engaged in retail trade and petroleum companies

      Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

1. This Act may be cited as the Credit Card Interest Limitation Act.

DEFINITIONS

Interpreta-
tion

2. The definitions in this section apply in this Act.

``Bank of Canada discount rate''
« taux d'escompte de la Banque du Canada »

``Bank of Canada discount rate'' means such minimum rate of interest at which the Bank of Canada is willing to make loans or advances as is determined the first day of each month by using the average rate in force for the previous month.

``company engaged in retail trade''
« compagnie qui fait de la vente au détail »

``company engaged in retail trade'' means a company specializing in the retail trade of non-food products other than petroleum or gas products.

``credit card''
« carte de crédit »

``credit card'' means any card, plate, coupon book or other device issued or otherwise distributed for the purpose of being used

    (a) on presentation to obtain, on credit, money, goods, services or any other thing of value; or

    (b) in an automated teller machine, a remote service unit or a similar automated banking device to obtain any of the services offered through the machine, unit or device.

``financial institution''
« institution financière »

``financial institution'' includes a bank to which the Bank Act applies, a credit union, a caisse populaire or any other cooperative credit society, a company to which the Trust and Loan Companies Act applies and any institution designated by the Governor in Council.

``interest rate''
« taux d'intérêt »

``interest rate'' does not include fees payable for the use of a credit card, administration costs payable for the use of a credit card, or entry fees or renewal fees related to an agreement to use a credit card.

``petroleum company''
« compagnie pétrolière »

``petroleum company'' means a company engaged in the retail trade of petroleum or gas products.

LIMITATION OF INTEREST RATE

Limitation of interest rate

3. No financial institution that charges or stipulates entry fees, user fees or renewal fees in relation to the use of a credit card issued by it shall charge or stipulate in relation thereto an annual interest rate exceeding by more than six and one-half per cent the Bank of Canada discount rate.

Limitation of interest rate

4. A financial institution that does not charge or stipulate entry fees, user fees or renewal fees in relation to the use of a credit card issued by it shall not charge or stipulate in relation thereto an annual interest rate exceeding by more than eight and one-half per cent the Bank of Canada discount rate.

Limitation of interest rate

5. No petroleum company shall charge or stipulate, in relation to the use of a credit card issued by it, an annual interest rate exceeding by more than nine and one-half per cent the Bank of Canada discount rate.

Limitation of interest rate

6. No company engaged in retail trade shall charge or stipulate, in relation to the use of a credit card issued by it, an annual interest rate exceeding by more than eleven and one-half per cent the Bank of Canada discount rate on any unpaid monthly balance exceeding four hundred dollars.

INFORMATION

Obligation

7. A financial institution, petroleum company or company engaged in retail trade shall, within the first five days of every quarter, in such form and manner and subject to such conditions as are prescribed by regulation, provide the Minister of Industry with information on the interest rate applicable to any credit card issued by it.

CALCULATION OF INTEREST

Calculation of interest

8. (1) Subject to subsection (2), interest on a credit card account shall be calculated as of the statement date and only on the amount, if any, by which the balance shown on the previous statement exceeds the amount paid on or before the due date shown on that previous statement.

Exception

(2) Subsection (1) does not apply where a credit card is

    (a) presented to obtain money on credit; or

    (b) used to obtain money in an automated teller machine, a remote service unit or a similar automated banking device.

Definition of ``due date''

(3) For the purposes of this section, ``due date'' means the date on which a payment falls due.

OFFENCE AND PUNISHMENT

Offence and punishment

9. Every person who contravenes any of sections 3 to 6 or section 8 is guilty of an offence and liable

    (a) on conviction upon indictment, to a fine not exceeding seventy-five thousand dol lars; and

    (b) on summary conviction, to a fine not exceeding fifty thousand dollars.

Continuous offence

10. Every one who contravenes section 7 is guilty of an offence and liable, on summary conviction, to a fine not exceeding five thousand dollars.

Separate offence

11. Where an offence is committed or continued on more than one day, it shall be deemed to be a separate offence for each day on which the offence is committed or continued.

REGULATIONS

Regulations

12. The Governor in Council may make regulations

    (a) designating any institution as a financial institution; and

    (b) providing for the form and content of information provided under section 7.

REVIEW

Review

13. (1) On the expiration of four years after the coming into force of this Act and every two years thereafter, the provisions contained herein shall be referred to such committee of the House of Commons, of the Senate or of both Houses of Parliament as may be designated or established by Parliament for that purpose.

Report

(2) The committee designated or established for the purpose of subsection (1) shall, as soon as practicable, undertake a comprehensive review of the provisions and operation of this Act and shall, within one year after the review is undertaken or within such further time as the House of Commons may authorize, submit a report to each House of Parliament thereon including such recommendations pertaining to the continuation of those sections and changes required therein as the committee may wish to make.

COMING INTO FORCE

Coming into force

14. This Act shall come into force six months after the date it is assented to.