1st Session, 36th Parliament,
46-47 Elizabeth II, 1997-98

The House of Commons of Canada

BILL C-396

An Act to establish the office of Credit Ombudsman to be an advocate for the interests of consumers and small business in credit matters and to investigate and report on the provision by financial institutions of consumer and small business credit by community and by industry in order to ensure equity in the distribution of credit resources

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

Short title

1. This Act may be cited as the Credit Ombudsman Act.

Definitions

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

``community''
« localité »

``community'' means an area the Ombudsman considers to be appropriate for providing information on credit for the purposes of this Act and may consist of all or parts of one or more electoral districts.

``electoral district''
« circonscrip-
tion »

``electoral district'' has the meaning given to that expression in the Canada Elections Act.

``financial institution''
« institution financière »

``financial institution'' means a bank, trust company, credit union or other organization established by or pursuant to an Act of Parliament or the legislature of a province that, as a part of its normal business, lends money or provides credit.

``Minister''
« ministre »

``Minister'' means the Minister of Finance.

``small business''
« petite entreprise»

``small business'' means a business that is entitled to a small business deduction under section 125 of the Income Tax Act.

``Standing Committee''
« comité permanent »

``Standing Committee'' means the Standing Committee of the House of Commons appointed to deal with matters of finance.

Office established

3. (1) There is hereby established the office of Credit Ombudsman.

Function of office

(2) The Credit Ombudsman shall be an advocate for the interests of consumers in credit matters and investigate and report on the provision by financial institutions of consumer and small business credit by industry and by community in order to ensure equity in the distribution of credit resources.

Appointment

4. (1) The Governor in Council shall appoint a Credit Ombudsman selected by the Minister from a list recommended by the Standing Committee.

Term

(2) The Credit Ombudsman holds office during good behaviour for a term of five years, but may be removed by the Governor in Council at any time on a resolution of the House of Commons following a report by the Standing Committee.

Acting Ombudsman

(3) In the event of the absence, resignation or incapacity of the Credit Ombudsman, the Governor in Council may, on the recommendation of the Minister, appoint another person to act as Credit Ombudsman for a term not exceeding six months.

No more than two terms

(4) No person may serve more than two terms as Credit Ombudsman.

Remunera-
tion

(5) The Credit Ombudsman shall receive such remuneration, benefits and reimbursement of expenses as is ordered by the Governor in Council.

Part of Public Service

(6) The Office of the Credit Ombudsman is a part of the Public Service of Canada.

Staff

(7) The Credit Ombudsman may hire, under the Public Service Employment Act, such officers and staff as are necessary to carry out the purposes of this Act.

ADVOCACY

Consumer and small business complaints

5. (1) The Credit Ombudsman may receive and investigate complaints in writing from consumers or small business of cases where financial institutions have unreasonably refused credit, placed unreasonable conditions on credit availability or refused to deal fairly with applicants for credit.

Investigations

(2) The Credit Ombudsman shall investigate those complaints referred to the office that appear to show that a financial institution has unreasonably refused credit, placed unreasonable conditions on credit availability or refused to deal fairly with an applicant for credit.

Criteria

(3) The Credit Ombudsman shall establish and make public criteria for the granting or refusing of credit on an equitable basis and for avoiding unfair discrimination in the availability of credit on the basis of community or industry and shall apply those criteria in an investigation under this section.

Information from financial institution

(4) A financial institution shall, notwithstanding any other Act, cooperate with the Credit Ombudsman in an investigation under this section and provide the information requested by the Credit Ombudsman respecting the credit application in case, including information that is private concerning the complainant if the complainant has consented thereto in writing.

Report of unfair dealing

(5) If the Credit Ombudsman is not satisfied that the financial institution has dealt fairly with the complainant initially or following the investigation, the Credit Ombudsman may, after giving ninety days prior written notice to the financial institution, and with the prior written consent of the complainant

    (a) report the matter in detail to the Minister in a report to be kept confidential; and

    (b) report the matter in general terms in a periodic report to the Standing Committee and, in so doing, may name the financial institution but not the consumer or small business.

FINANCIAL INSTITUTIONS WITH UNFAIR LENDING POLICIES

Notice re unfair policies

6. (1) If the Credit Ombudsman is of the opinion, based on complaints that have been investigated pursuant to section 5, that a financial institution has credit policies and practices in one or more communities that are unfair, the Credit Ombudsman may give notice to the institution of the changes that are necessary to establish fair policies and practices.

Changes to be made

(2) Within ninety days of receiving a notice under subsection (1), the financial institution shall advise the Credit Ombudsman of the changes that will be made in the financial institution's credit policies and practices.

Changes unsatisfactory or not made

(3) If the Credit Ombudsman is not satisfied with the changes proposed by a financial institution under subsection (2), or if, on investigation, the Credit Ombudsman finds that the proposed changes have not been made, the Credit Ombudsman shall submit a report on the matter to the Minister.

Report referred to Standing Committee

(4) The Minister shall forthwith cause every report received pursuant to subsection (2) to be laid before both Houses of Parliament and it shall be deemed to have been referred to the Standing Committee for review and report to the House of Commons.

DISCLOSURE OF CREDIT AVAILABILITY

Collection and disclosure of information

7. The Credit Ombudsman shall

    (a) collect information on credit sought from and granted by financial institutions to consumers and small business to ascertain, by statistical analysis, whether the availability of credit is equitably distributed on a community basis and on an industry basis throughout Canada;

    (b) for the purposes of paragraph (a), require every financial institution, when a consumer or small business has applied for credit, to complete a form showing information prescribed by the Credit Ombudsman respecting the granting or refusal of the credit and give it to the consumer or small business who may, if the consumer or small business so chooses, complete it and send it to the Credit Ombudsman, with the further information prescribed by the Credit Ombudsman, including the rate of interest charged and other terms of the loan, the electoral district, community and industry group in which the consumer or small business resides or operates and, in the case of an individual, the sex of the individual seeking the credit;

    (c) analyze and prepare reports on the availability of credit in different electoral districts or other communities and industry groups, and to male and female applicants;

    (d) submit reports prepared under paragraph (c) to the Standing Committee; and

    (e) cooperate with consumer groups, business groups and financial institutions to facilitate the achievement of the purposes of this Act.

GENERAL

Information confidential

8. (1) Except in reference to a report under paragraph 4(a), the Credit Ombudsman shall keep confidential all information received pursuant to this Act.

Exception

(2) Subsection (1) does not apply if the information is evidence of or relevant to the investigation of an offence under the Criminal Code or any other Act of Parliament.

Power to define and prescribe

9. The Credit Ombudsman may, with the prior approval of the Minister, define communities and industry groups and prescribe forms and information to be provided or volunteered for the purposes of this Act.

Notice of Ombudsman's services

10. The Credit Ombudsman may require every financial institution to

    (a) post prominently at every place of business where credit may be applied for, and

    (b) include in advertisements or other communications, whether physical or electronic, offering credit

a notice, in the form prescribed by the Credit Ombudsman, describing the function of the office of the Credit Ombudsman and the means of contacting the office.

Annual report

11. The Credit Ombudsman shall submit to the Minister by April 1 of every year a report on the functions of the office of Credit Ombudsman during the previous year and on the availability of credit on an equitable basis in Canada, and the Minister shall forthwith cause the report to be laid before both Houses of Parliament.

OFFENCES AND PENALTIES

False information

12. (1) Every person who provides false information to the Credit Ombudsman in connection with the operation of this Act is guilty of an offence.

Refusal to provide information

(2) Every person who refuses or fails to provide information requested by the Credit Ombudsman under the authority of this Act is guilty of an offence.

Punishment

(3) Every person who commits an offence under this Act is liable, on summary conviction, to a fine not exceeding $5,000 for a first offence and to a fine not exceeding $25,000 or imprisonment for not more than six months, or to both, in the case of a second or subsequent offence.