Ontario Consumers seeking solutions to their debt problems are soon to be protected by the provincial government.
New regulations for Debt Settlement companies are intended to control the misleading and disceptive business practices of this predatory industry. Debt settlement companies have been outlawed in the United States in 2010 and in many provinces in Canada. The provincial counterparts for consumer protection in Alberta, Manitoba and Nova Scotia proactively created tough regulations to control the business practices of Debt Settlement companies.
Ontario, although slow out of the gate, is following suit this week but announcing a review of the business practices and tabling a list of new regulations to protect the citizens of Ontario.
Although still in review stages, the new regulations will include:
- Eliminating all upfront fees charged by Debt Settlement. Only after the services have been rendered successful will the debt settlement company allowed to collect their fees.
- Require clear transparent contracts, detailing the services, fees and process to pay off creditors.
- 10 Day cooling off period for consumers signing a service contract, allowing the full termination of the contract with no fees or service charges.
- Limit and control the amount of fees charged by the Debt Settlement companies. Fees will be based not only on the success of the settlement but on the value of the debt.
There are over 20 debt settlement companies licensed in as debt collectors in Ontario. There are many more debt companies that operate through shell companies and marketing companies from the United States.