Debt Settlement Companies to be Regulated in Ontario
Ontario made this announcement in January 2013. This regulation comes on the heels of an explosion of ‘debt reduction’ companies that charge up-front fees and will even collect money from consumers with the promise of settling debts in the future.
The Ontario Government’s new regulations will include:
- Not allowing debt settlement companies to charge up-front fees when negotiating debt settlements.
- Limiting the amount that a debt settlement company can charge.
- Requiring that debt settlement companies are transparent and provide their clients with clear written agreements.
- Allowing a consumer to have a 10 day cooling off period in the event that the individual changes his/her mind.
The Ontario Government has put out requests for consultation from the public, including from debt settlement companies themselves. We have long advocated for this kind of regulation. As a financial consulting firm committed to helping those Canadians struggling with debt, we have never charged up-front fees or made exaggerated claims to our customers.
Debt continues to be a rampant problem in Canada with many consumers turning to credit to balance the shortfalls with the ever rising cost of living and transportation in major city centres.
The idea of regulating debt settlement companies is not restricted to Ontario. It is an idea that is spreading across the country. Stated in the press release issued by the Ontario Government was the fact that Alberta, Manitoba and Nova Scotia have also introduced regulations with respect to debt settlement companies.
Here are some other sobering facts that the Ontario Government included in their press release:
- Average consumer debt in Ontario is up to $25,447 in the second quarter of 2012, compared to $24,721 in the second quarter of 2011.
- For every dollar Canadians earn, they have $1.64 in unsecured debt (Statistics Canada).
These figures substantiate why there are more than 20 debt settlement companies already operating in Ontario. Perhaps while the Ontario Government looks at regulating these 20 debt companies, they should also take a look at reducing the fees and interest rates that credit card, loan and payday loan companies are allowed to charge which often results in consumers needing financial help.
There are systemic problems in this country and unfortunately the ones who always seem to get the short end of the stick are consumers.
It is the consumers who are drowning in debt and then finding themselves in the offices of debt settlement companies looking for relief. These are the same consumers who (depending on their choice of debt settlement company) may also end up in a debt reduction program that doesn’t make sense or whose fees are sky high.
So regulate, regulate, regulate we say! We support any effort on the part of the Ontario Government to see Canadian consumers get fair treatment.
For more information about debt settlement companies or if you have a debt problem and need help, please call 416-907-2582 or visit www.debtcare.ca.