Decision #37923-585Q205

File: 37923-585Q205

Compliance issue

Cost of borrowing — Failure to disclose to a borrower — in writing, and at most 30 days after the borrower enters into a subsequent loan agreement — the new payment schedule and any increase in the total amount to be paid for the loan.
Cost of Borrowing (Banks) Regulations ss. 1, 13(2)

A consumer contacted FCAC to report that the bank had made changes to the loan on which he was a co-borrower, without his knowledge or consent, and that he had not received disclosure documentation from the bank about the changes.

Section 1 of the Regulations stipulates that the term “borrower” includes both a person to whom a loan is proposed to be made and a holder, or an applicant to become a holder, of a credit card.

Subsection 13(2) of the Regulations states that, if a loan agreement for a fixed amount contains a schedule for instalment payments and the schedule is amended by a subsequent agreement, the bank must — in writing, and at most 30 days after entering into the subsequent agreement — disclose to the borrower the new payment schedule and any increase in the total amount to be paid, or the cost of borrowing.

Decision taken

A Letter of ReprimandFootnote 1  was issued, noting one violation against the bank.

Compliance considerations

FCAC noted that this was an isolated incident, which resulted from the failure by one bank employee to follow internal procedures.

Prior to this incident, FCAC had not received any complaints of this nature about the bank.

Measures taken by financial institution

Before the incident, the bank had implemented policies and procedures to ensure that all borrowers are required to sign amendments to loans, and are provided with the appropriate disclosure documents.

Since this was an isolated incident, the bank provided training to the employee concerned.


Consumers who receive proper notices of amendments to their loan agreements are better able to weigh their options and choose the best course of action for their needs. In this case, the co-borrower did not have any knowledge of the amendments to his loan agreement. Providing all borrowers with disclosure documents enables consumers to make informed decisions about the future of their finances. FCAC is currently reviewing industry practices on disclosure related to loans involving multiple borrowers.

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