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Ottawa, March 15, 2001
2001-028

Making It Plain: Government Releases Model Plain Language Loan Disclosure Documents

Related documents:

• Model Credit Card Agreement.
• Model Credit Card Application.
• Model Line of Credit Agreement.
• Model Vehicle Loan Agreement.

Secretary of State (International Financial Institutions) Jim Peterson today released four model plain language loan disclosure documents designed to make it easier for consumers to understand these types of agreements.

The four documents cover credit card applications, credit card agreements, personal lines of credit and vehicle loan agreements. All financial institutions and retail loan providers in Canada are encouraged to use these model documents as guidelines in developing their own plain language loan disclosure agreements.

"Canadians have told us that they want to be provided with clear, easy-to-understand information to help them make important financial decisions," said Secretary of State Peterson. "These model documents will help loan providers across Canada meet this need. The new documents will also help financial institutions meet the new harmonized cost-of-borrowing disclosure requirements, which will be applied to federally regulated financial institutions in the coming months."

The need for plain language financial documents was first brought forward in the report issued by the Task Force on the Future of the Canadian Financial Services Sector, which was released in 1998. The development of these documents was one of the commitments made by the Government in the June 1999 policy paper entitled Reforming Canada’s Financial Services Sector: A Framework for the Future.

Following the policy paper’s release, a joint federal-provincial task force held extensive consultations with industry and consumer stakeholders on issues related to the development of model plain language disclosure documents. The information gained from these consultations was used to draft the model loan contracts, which have been tested with a wide range of consumers.

"This process is an example of how the federal government, provincial authorities and the financial services industry can work together to the benefit of consumers," said Secretary of State Peterson. "I commend all the parties involved for their excellent work."

Copies of the model loan disclosure documents are available on the Department of Finance Web site at www.fin.gc.ca.

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