BILL NO. 107

(as introduced)

4th Session, 61st General Assembly
Nova Scotia
61 Elizabeth II, 2012



Government Bill



Debt Collection and Management Reform (2012) Act



The Honourable John MacDonell
Minister of Service Nova Scotia and Municipal Relations



First Reading: October 31, 2012

(Explanatory Notes)

Second Reading: November 8, 2012

Third Reading: November 23, 2012 (WITH COMMITTEE AMENDMENTS) (LINK TO BILL AS PASSED)

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Explanatory Notes

Clause 1 sets out the short title of this Act.

Clauses 2 and 3 add "Debt Management" to the titles of the Collection Agencies Act.

Clause 4

(a) amends definitions of "collection agency", "collector" and "Minister"; and

(b) adds definitions for "debt management agency" and "debt management agent".

Clause 5 allows persons or classes of persons to be exempted from the Act by regulation.

Clause 6

(a) states that the Act prevails over any agreement to the contrary; and

(b) confirms that any waiver of the protections under the Act is void.

Clause 7

(a) updates language; and

(b) empowers the Registrar to issue four classes of licence.

Clause 8

(a) changes "business" to "activities";

(b) expands the former Section 5 to include debt management agencies and agents as those persons and individuals required to be licensed;

(c) prohibits persons being licensed as both collection agencies and debt management agencies at the same time;

(d) prohibits individuals from being licensed as both collectors and debt management agents at the same time; and

(e) clarifies that collection agencies and debt management agencies must

Clause 9 requires any person or individual holding itself, himself or herself out as a collection agency, debt management agency, collector or debt management agent to hold the appropriate licence.

Clause 10

(a) updates language;

(b) provides that only one copy of the agreement and demand letter needs to be filed with the Registrar; and

(c) provides that security other than a bond may be prescribed as acceptable by the regulations.

Clause 11 requires a debt management agency to file with the Registrar the agency's form of agreement used with debtors, the content and form of which may be prescribed by regulation.

Clause 12 updates language.

Clause 13 adds the requirement for an endorsement on the application and licence of a debt management agent by a debt management agency.

Clause 14 extends agent-deeming provisions, which apply to collection agencies, to debt management agencies.

Clause 15

(a) updates language;

(b) extends the termination notice requirement for collection agents to include debt management agents; and

(c) creates the same offence to apply to debt management agencies as applies to collection agencies.

Clause 16 provides that neither unlicensed agencies nor collectors or debt management agents can take legal action against debtors to recover money unless exempted by this Act or the regulations.

Clause 17 prohibits the transfer of debt-management-agent licences between debt management agencies.

Clause 18 requires a debt management agent whose licence is terminated to make a new licence application.

Clause 19 updates language.

Clause 20

(a) updates language;

(b) replaces the word "business" with "activities";

(c) adds debt management agencies to the agencies whose licence may be suspended when a bond is terminated;

(d) adds "or other form of security" to the bond requirement; and

(e) provides for the termination of the licences of all agents of the debt management agency when the licence of the debt management agency is suspended or cancelled.

Clause 21

(a) updates language; and

(b) changes references to the county court and Appeal Division of the Supreme Court to the Supreme Court of Nova Scotia and Nova Scotia Court of Appeal respectively.

Clause 22 requires record-keeping by debt management agencies.

Clause 23 expands the trust account requirements of collection and debt management agencies.

Clause 24 adds to and clarifies prohibited collection practices.

Clause 25 sets out prohibited practices for debt management agencies and debt management agents.

Clause 26

(a) updates language;

(b) expands Section 21 to permit the Registrar to investigate debt management companies; and

(c) gives collection and debt management agencies that maintain their records outside Nova Scotia the option of requesting permission to produce their records for inspection at a place outside Nova Scotia provided they pay the cost of the inspection.

Clause 27 expands Section 22 to include debt management agencies.

Clause 28

(a) prohibits false or misleading advertising; and

(b) permits the cancellation by a debtor of a contract with a debt management agency.

Clause 29 provides that failure to comply with an order of the Registrar is an offence.

Clause 30 increases the penalties for an offence under the Act to make them consistent with those under the Consumer Protection Act.

Clause 31 replaces "business" with "activity" in Section 25 and adds "debt management agency".

Clause 32 adds "debt management agency" and "debt management agent" to Section 26.

Clause 33 increases the limitation period for prosecution from two to three years to make it consistent with the Consumer Protection Act.

Clause 34 allows a debtor to recover in court money paid contrary to the Act.

Clause 35 allows the Governor in Council to make regulations respecting the additions to the Act.

Clause 36 updates language.

Clause 37 provides for the expiry of existing licences for collection agencies and collectors who engage in debt management activities.

Clause 38 updates the language in clause 2(b) of the Consumer Creditors' Conduct Act.

Clause 39 updates the name of the Minister responsible for the Consumer Creditors' Conduct Act.

Clause 40

(a) updates language; and

(b) adds to and clarifies prohibited practices to make the Act consistent with the relevant protections in the Collection Agencies Act.

Clause 41 confirms the Act prevails over any agreement to the contrary.

Clause 42

(a) adjusts the minimum and maximum fines; and

(b) lengthens the limitation period for prosecution to three years,

to be consistent with the Consumer Protection Act.

Clause 43 adds regulation-making authority for the Governor in Council.

Clauses 44 and 45 repeal amendments to the Collection Agencies Act and Consumer Creditors' Conduct Act that have not been proclaimed in force.

Clause 46 provides that this Act comes into force upon proclamation.

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An Act to Amend Chapter 77
of the Revised Statutes, 1989,
the Collection Agencies Act,
and Chapter 91 of the
Revised Statutes, 1989,
the Consumer Creditors' Conduct Act,
to Ensure the Respectful Collection
and Responsible Management of Debt

Be it enacted by the Governor and Assembly as follows:

1 This Act may be cited as the Debt Collection and Management Reform (2012) Act.

COLLECTION AGENCIES ACT

2 The title of Chapter 77 of the Revised Statutes, 1989, An Act Respecting Collection Agencies, is amended by adding "and Debt Management" immediately after "Collection".

3 Section 1 of Chapter 77 is amended by adding "and Debt Management" immediately after "Collection" in the first line.

4 Section 2 of Chapter 77, as amended by Chapter 8 of the Acts of 1998, Chapter 3 of the Acts of 2003 (Second Session) and Sections 44 and 45 of this Act, is further amended by

(a) striking out "he" in the fifth line of clause (a) and substituting "it";

(b) adding ", but does not include a debt management agency" immediately after "scheme" in the last line of clause (a);

(c) striking out "a person" in the first line of clause (b) and substituting "an individual";

(d) adding immediately after clause (b) the following clauses:

and

(e) striking out "Consumer Affairs" in the first and second lines of clause (d) and substituting "Service Nova Scotia and Municipal Relations".

5 Section 3 of Chapter 77 is repealed and the following Section substituted:

6 Chapter 77 is further amended by adding immediately after Section 3 the following Section:

7 (1) Subsection 4(2) of Chapter 77 is amended by striking out "him" in the second line and substituting "the Registrar".

(2) Section 4 of Chapter 77 is amended by adding immediately after subsection (2) the following subsection:

8 Section 5 of Chapter 77 is repealed and the following Section substituted:

9 Chapter 77 is further amended by adding immediately after Section 5 the following Section:

10 (1) Subsection 6(1) of Chapter 77 is amended by striking out "him" in the second line and substituting "the Registrar"; and

(2) Subsection 6(3) of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by

(a) adding "collection agency" immediately after "a" the first time it appears in the first line;

(b) striking out "as a collection agency shall file with" in the first and second lines and substituting "shall deliver to";

(c) striking out "two copies" in the first line of clause (a) and substituting "one copy";

(d) striking out "he" in the last line of clause (a) and substituting "the collection agency";

(e) striking out "two copies" in the first line of clause (b) and substituting "one copy"; and

(f) adding "or other form of security" immediately after "bond" in the first line of clause (c).

11 Chapter 77 is further amended by adding immediately after Section 6 the following Section:

12 Subsection 7(2) of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by striking out "his" in the second line and substituting "the licensee's".

13 Section 8 of Chapter 77 is amended by adding immediately after subsection (2) the following subsections:

14 Section 9 of Chapter 77 is amended by

(a) adding "(1)" immediately after the Section number; and

(b) adding the following subsection:

15 (1) Subsection 10(1) of Chapter 77 is amended by striking out "him" in the fourth line and substituting "the collection agency".

(2) Subsection 10(2) of Chapter 77 is amended by striking out "him" in the third line and substituting "it".

(3) Section 10 of Chapter 77 is further amended by adding immediately after subsection (2) the following subsections:

16 Chapter 77 is further amended by adding immediately after Section 10 the following Section:

17 Section 11 of Chapter 77 is amended by

(a) adding "(1)" immediately after the Section number; and

(b) adding the following subsection:

18 Section 12 of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by

(a) adding "(1)" immediately after the Section number;

(b) striking out "with whom he was previously licensed" in the third line and substituting "for whom the collection agent was previously authorized to act"; and

(c) adding the following subsection:

19 Subsection 13(2) of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by striking out "his" in the second line and substituting "the licensee's".

20 (1) Subsection 15(1) of Chapter 77, as amended by Chapter 8 of the Acts of 1998, Chapter 3 of the Acts of 2003 (Second Session) and Sections 44 and 45 of this Act, is further amended by

(a) striking out "he" in the second line and substituting "the Registrar";

(b) striking out "his" in the last line of clause (a) and substituting "the licensee's";

(c) striking out "his" in the second line of clause (b) and substituting "the licensee's";

(d) striking out "him" in the third line of clause (b) and substituting "the licensee";

(e) adding "or 6A" immediately after "6" in the last line of clause (b);

(f) striking out clause (d) and substituting the following clause:

(d) has demonstrated incompetency, unfitness or untrustworthiness to carry on the activities in respect of which the licensee's licence was granted.

(2) Subsection 15(2) of Chapter 77 is repealed and the following subsection substituted:

(3) Subsection 15(3) of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by striking out "shall be" in the last line and substituting "are".

(4) Section 15 of Chapter 77, as amended by Chapter 8 of the Acts of 1998, Chapter 3 of the Acts of 2003 (Second Session) and Sections 44 and 45 of this Act, is further amended by adding immediately after subsection (3) the following subsection:

21 (1) Subsection 17(1) of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by

(a) striking out "county court" in the third line and substituting "Supreme Court of Nova Scotia"; and

(b) striking out "him" in the first line of clause (g) and substituting "the judge".

(2) Subsection 17(3) of Chapter 77 is amended by striking out "him" in the second line and substituting "the Registrar".

(3) Subsection 17(4) of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by

(a) striking out "Appeal Division of the Supreme Court" in the first and second lines and substituting "Nova Scotia Court of Appeal";

(b) striking out "county court" in the second line and substituting "Supreme Court of Nova Scotia";

(c) striking out "Appeal Division" in the fourth line and substituting "Nova Scotia Court of Appeal"; and

(d) striking out "him" in the fifth line and substituting "the judge".

22 Section 19 of Chapter 77 is repealed and the following Section substituted:

23 Chapter 77 is further amended by adding immediately after Section 19 the following Sections:

24 Subsection 20(1) of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by

(a) adding immediately after clause (b) the following clauses:

(b) striking out clause (d) and substituting the following clause:

(c) striking out clause (e) and substituting the following clause:

(d) striking out "he has previously sent him a notice in writing" in the second and third lines of clause (f) and substituting ", at least five days in advance of the first verbal contact with the debtor, the collection agency sends the debtor written notice and, where the debtor claims that the debtor did not receive the notice, the collection agency shall send the written notice to the debtor at an address provided by the debtor";

(e) striking out "in the Province" in the fourth and fifth lines of clause (h);

(f) adding ", any member of the debtor's family or household, any relative, neighbour, friend or acquaintance of the debtor, the debtor's employer or any person who has guaranteed to pay the debt of the debtor" immediately after "debtor" in the second line of clause (i);

(g) striking out "his spouse or any member of his family" in the last line of clause (j) and substituting "any member of the debtor's family or household, any relative, neighbour, friend or acquaintance of the debtor, the debtor's employer or any person who has guaranteed to pay the debt of the debtor";

(h) striking out clause (k) and substituting the following clause:

(i) striking out "that may be detrimental to a debtor, his spouse or any member of his family" in the third, fourth and fifth lines of clause (l);

(j) striking out ", his spouse or any member of his family" in the third and fourth and in the sixth and seventh lines of clause (m) and substituting in each case "or any member of the debtor's family or household";

(k) adding immediately after clause (m) the following clause:

(l) striking out clause (o) and substituting the following clauses:

(m) striking out the period at the end of clause (p) and substituting "; or"; and

(n) adding the following clause:

25 Chapter 77 is further amended by adding immediately after Section 20 the following Section:

26 (1) Subsection 21(1) of Chapter 77 is amended by

(a) striking out "him" in the second line and substituting "the Registrar"; and

(b) striking out "he" in the third line and substituting "the Registrar".

(2) Subsection 21(3) of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session), is further amended by

(a) striking out "him" in the second line and substituting "the Registrar"; and

(b) adding "or debt management agency" immediately after "agency" in the last line.

(3) Section 21 of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by adding immediately after subsection (3) the following subsections:

27 (1) Subsection 22(1) of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by adding "or debt management agency" immediately after "agency" in the second line.

(2) Section 22 of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by adding immediately after subsection (2) the following subsection:

28 Chapter 77 is further amended by adding immediately after Section 22 the following Sections:

29 Section 23 of Chapter 77 is amended by

(a) striking out "or" at the end of clause (a);

(b) striking out the comma at the end of clause (b) and substituting "; or"; and

(c) adding the following clause:

30 (1) Subsection 24(1) of Chapter 77 is repealed and the following subsection substituted:

31 Section 25 of Chapter 77 is amended by

(a) striking out "business" in the second line and substituting "activities";

(b) adding "or debt management agency" immediately after "agency" in the third line; and

(c) striking out "business" in the last line and substituting "activity".

32 Section 26 of Chapter 77, as amended by Chapter 8 of the Acts of 1998 and Section 44 of this Act, is further amended by striking out clauses (a), (b) and (c) and substituting the following:

33 Section 27 of Chapter 77, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by

(a) striking out "shall" in the second line and substituting "may"; and

(b) striking out "two" in the second line and substituting "three".

34 Chapter 77 is further amended by adding immediately after Section 27 the following Section:

35 Section 28 of Chapter 77, as amended by Chapter 8 of the Acts of 1998, Chapter 3 of the Acts of 2003 (Second Session) and Sections 44 and 45 of this Act, is further amended by

(a) adding ", or requiring forms to be in a form specified by the Registrar," immediately after "Act" in the second line of clause (c);

(b) adding immediately after clause (c) the following clause:

(c) adding "and debt management agencies" immediately after "agencies" in the second line of clause (d);

(d) adding immediately after clause (d) the following clauses:

(e) adding "and debt management agencies" immediately after "agencies" in the second line of clause (e);

(f) striking out "unclaimed money" in the fifth and sixth lines of clause (e) and substituting "money that is unclaimed or cannot be returned to a debtor";

(g) adding immediately after clause (e) the following clauses:

(h) striking out clause (f) and substituting the following clauses:

(i) adding "and debt management agencies" immediately after "agencies" in the first line of clause (g);

(j) adding ", and respecting the time and manner for providing the information" immediately after "Registrar" in the last line of clause (g);

(k) adding after clause (h) the following clauses:

(l) striking out "in the collection of debts" in the last line of clause (i) and substituting "or practice by collection agencies or debt management agencies";

(m) adding immediately after clause (i) the following clause:

(n) striking out "or collector" in the second line of clause (j) and substituting ", debt management agency, collector or debt management agent";

(o) adding immediately after clause (j) the following clauses:

36 Section 29 of Chapter 77 is amended by striking out "shall be" in the second line and substituting "is".

37 All existing collection agency and collectors' licences expire ninety days after the coming into force of this Act if the licensee is engaged in activities that require a debt management agency licence or debt management agent licence.

CONSUMER CREDITORS' CONDUCT ACT

38 Section 2 of Chapter 91 of the Revised Statutes, 1989, the Consumer Creditors' Conduct Act, is amended by striking out "his" in the last line of clause (c) and substituting "the person's".

39 Section 3 of Chapter 91, as amended by Chapter 3 of the Acts of 2003 (Second Session) and Section 45 of this Act, is further amended by striking out "Consumer Affairs" in the second line and substituting "Service Nova Scotia and Municipal Relations".

40 Section 4 of Chapter 91 is amended by

(a) striking out "owed" in the second line of clause (a) and substituting "owing";

(b) adding immediately after clause (a) the following clauses:

(c) striking out clause (c) and substituting the following clause:

(d) striking out clause (d) and substituting the following clause:

(e) striking out "in the Province" in the fourth line of clause (e);

(f) adding ", any member of the borrower's family or household, any relative, neighbour, friend or acquaintance of the borrower, the borrower's employer or any person who has guaranteed to pay the debt of the borrower" immediately after "borrower" in the first line of clause (f);

(g) striking out "the borrower" in the second line of clause (f) and substituting "a person";

(h) striking out "his spouse or any member of his family" in the last line of clause (g) and substituting "any member of the borrower's family or household, any relative, neighbour, friend or acquaintance of the borrower, the borrower's employer or any person who has guaranteed to pay the debt of the borrower";

(i) striking out clause (h) and substituting the following clause:

(j) striking out "that may be detrimental to a borrower, his spouse or a member of his family" in the third and last lines of clause (i);

(k) striking out ", his spouse or any member of his family" in the second and in the last lines of clause (j) and substituting in each case "or any member of the borrower's family or household";

(l) adding "or herself" immediately after "himself" in the second line of clause (k);

(m) striking out the period at the end of clause (k) and substituting a semicolon; and

(n) adding immediately after clause (k) the following clauses:

41 Chapter 91 is further amended by adding immediately after Section 4 the following Section:

42 (1) Subsection 5(1) of Chapter 91 is amended by

(a) striking out "penalty of not more than two" in the fifth and sixth lines and substituting "fine of not less than five hundred dollars nor more than twenty-five"; and

(b) adding "or the regulations" immediately after "Act" in each case in the second and in the fourth lines.

(2) Subsection 5(2) of Chapter 91 is amended by striking out "twenty-five" in the last line and substituting "three hundred".

(3) Subsection 5(3) of Chapter 91 is amended by striking out "one year" in the second line and substituting "three years".

43 Chapter 91 is further amended by adding immediately after Section 5 the following Section:

GENERAL

44 Sections 3 to 15 of Chapter 8 of the Acts of 1998, the Business Efficiency (1998) Act, are repealed.

45 Chapter 3 of the Acts of 2003 (Second Session), An Act to Amend Chapter 77 of the Revised Statutes, 1989, the Collection Agencies Act, and Chapter 91 of the Revised Statutes, 1989, the Consumer Creditors' Conduct Act, is repealed.

46 This Act comes into force on such day as the Governor in Council orders and declares by proclamation.

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