Good news for those in debt, says Sudbury credit counsellor
Province's new rules will protect consumers
Posted: Jan 4, 2013 2:49 PM ET
Last Updated: Jan 4, 2013 2:47 PM ET
The executive director of a credit counselling centre in Sudbury is happy with the province's move to regulate debt settlement companies.
On Friday the province announced it's putting new rules in place that will ban such companies from charging up-front fees. The rules will also limit the amount of money a company can charge and will require those companies to produce clear contracts.
“In the past, the companies were capable of charging you exorbitant fees for little or no service,” said Linda Morel, who is with the Sudbury Community Service Centre, a not-for-profit credit counselling agency.
“And many consumers were carefully misled by the services they claimed to provide."
She said the new rules will benefit and protect consumers.
Debt settlement companies would be required to offer clear, transparent contracts and implement a 10-day cooling-off period.
'Evidence of harmful practices'
More than 20 debt settlement companies currently operate in Ontario.
The governing Liberals said the Ontario Association of Credit Counselling Services receives more than 100 complaints about debt settlement companies a month.
"There is evidence of harmful practices used by some debt settlement companies and that is why our government is taking steps to protect consumers," Consumer Services Minister Margarett Best said in a statement.
"Consumers should know their rights before they sign contracts and they should not make any payments until they get results."
The regulations are similar to ones introduced in other provinces, such as Alberta, Manitoba and Nova Scotia.With files from Canadian Press
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