Consumer credit disclosure requirements in Canada

Consumer credit products in Canada are subject to provincial disclosure requirements that specify what information must be given to borrowers, in what form, and at what point in the lending process. Those requirements vary across provinces and apply based on where the borrower is located, not where the lender is incorporated. A fintech lending product that serves customers across Canada faces a multi-jurisdictional disclosure obligation that needs to be designed into the product from the start.

What disclosure legislation requires

Each Canadian province with consumer credit legislation requires the lender to provide certain information to the borrower before or at the time the credit agreement is entered. The core disclosures include the annual percentage rate or annual cost of borrowing, the total amount borrowed, the total amount of payments the borrower will make, the payment schedule, any fees and charges, and the borrower’s rights under the applicable legislation including any cooling-off period.

The format requirements for those disclosures vary. Some provinces require the disclosure to appear in a specific form, in a specific location in the credit agreement, or in a specific type size. Digital credit products need to design the disclosure flow to meet these format requirements for each province in which the product is offered.

How disclosure requirements differ across provinces

Ontario’s Consumer Protection Act and Regulation 17 set out specific disclosure requirements for credit agreements entered in Ontario. British Columbia’s Business Practices and Consumer Protection Act applies a similar framework. Quebec’s Consumer Protection Act applies its own disclosure rules, and lending to Quebec consumers involves additional considerations under Quebec civil law.

The differences across provinces include which products are subject to the legislation, how the annual percentage rate is calculated and disclosed, what fees must be included in the cost of borrowing calculation, and whether a cooling-off period applies and what rights it gives the borrower. A product designed around Ontario’s requirements may not fully satisfy the requirements in Quebec or British Columbia without modification.

For fintech platforms that lend nationally, the practical approach is to identify the disclosure requirements in each province where customers will be located, design the disclosure flow to meet the most demanding requirements, and confirm that the resulting disclosure satisfies the requirements in each province.

Payday lending and short-term credit

A specific category of consumer credit regulation applies to payday loans and short-term high-cost credit. Provinces that have payday lending legislation, including Ontario, British Columbia, Alberta, and Manitoba, impose licensing requirements, interest rate caps, and specific disclosure requirements on payday lenders that are more stringent than general consumer credit legislation.

Buy now pay later and short-term installment products may engage these rules in some provinces depending on the product structure and the cost of credit. A product that is not designed as a payday loan may nonetheless be subject to payday lending regulation if its characteristics match the statutory definition.

What lending platforms should address

A fintech platform launching a consumer lending product should identify which provinces it will serve, confirm the disclosure requirements in each of those provinces, design the customer-facing documents and digital disclosure flow to meet those requirements, and obtain legal review of the final product before launch.

Where the product is intended to expand into additional provinces over time, building the disclosure framework to accommodate provincial variation from the outset is more efficient than retrofitting disclosures for each new market.

Related topics

• Lending legal and regulatory intelligence
• Lender of record structures in Canadian fintech lending
• Lending compliance structures