Credit reporting act aims to provide clarity and protection for consumers28 September 2018
SAINT JOHN (GNB) – New consumer protection laws related to credit reporting, credit repair and debt settlement will take effect Oct. 1.
The Financial and Consumer Services Commission will administer and enforce the new Credit Reporting Services Act, which regulates credit reporting agencies and restricts certain activities of credit repair agencies.
“These new rules improve consumer protection in New Brunswick by providing clarity for consumers around what to expect from a credit reporting agency,” said Alaina Nicholson, the commission’s director of consumer affairs. “The rules require credit reporting agencies to collect, maintain and report your credit and personal information accurately and responsibly.”
The act and supporting rules make it a requirement for credit reporting agencies to be licensed. They also specify what information must be maintained in an agency’s files, as well as what can be included in a consumer’s credit report. The act and rules are meant to protect consumers’ privacy when a credit report is requested.
A credit reporting agency collects and maintains information regarding an individual’s credit history from sources such as banks, utility providers and telecommunications, mortgage and credit card companies. This information is used to create a credit score, which is used by lenders to determine the risk an individual represents with respect to paying back debt. Credit reports can have great influence over the lives of consumers, as the reports are used to determine eligibility for loans, housing and, sometimes, jobs.
Credit repair agencies offer to help consumers repair their credit rating for fees, and it is important for consumers to understand what these companies can and cannot do when offering such services. The only way to rectify poor credit is to adopt sound repayment practices for a period of time.
“The new act and rules also set out rules and restrictions on the activities of credit repair agencies in areas such as contract cancellation and charging advance fees to the consumer for their services,” said Nicholson. “Credit repair agencies are not licensed by any federal or provincial agencies, so this is another positive win for consumer protection.”
Debt settlement companies are usually for-profit companies that offer to negotiate with creditors on behalf of an individual. Typically, they offer a lump sum of money to eliminate the individual’s debt, which tends to be lower than the total debt. They make money from fees that they charge to clients.
Additionally, amendments to the Collection Agencies Act give the commission regulatory responsibilities over debt settlement agencies. These changes aim to enhance consumer protection by requiring agencies that provide debt settlement services to be licensed; be subject to suitability requirements and checks; adhere to specific contract requirements; and be prohibited from certain activities. The amendments also rename the act as the Collection and Debt Settlement Services Act.
“We are pleased with these additional rules and amendments as they increase protection of New Brunswick consumers,” said Nicholson. “By clearly outlining consumers’ rights and responsibilities, and defining what these agencies are and are not allowed to do, New Brunswickers will be in a better position to make positive financial decisions.”
More information about credit reporting agencies, credit repair agencies, good credit practices and more is available online.
The Financial and Consumer Services Commission has the mandate to protect consumers and enhance public confidence in the financial and consumer marketplace through the provision of regulatory and educational services. It is responsible for the administration and enforcement of provincial legislation regulating mortgage brokers, payday lenders, real estate, securities, insurance, pensions, credit unions, trust and loan companies, co-operatives, and a wide range of other consumer legislation. It is an independent Crown corporation funded by the regulatory fees and assessments paid by the regulated sectors. Online educational tools and resources are available online.