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May 27, 2013
For immediate release
Newly-approved legislation regulates activities of debt settlement companies
Environment, Labour and Justice
By setting out a framework of unacceptable practices for debt settlement companies, these measures will allow beneficial groups to continue to offer assistance. This will curtail those companies which take advantage of financially vulnerable people, Minister Sherry said.
Debt settlement companies act as mediators between people with debt issues and creditors seeking payment. In some cases this can be an effective way of dealing with debt, but occasionally customers have paid high fees in return for little help.
Recently approved amendments to the Collection Agencies Act include:
limiting the amount of money that a debt settlement company may collect for acting for a debtor;
prohibiting provision of false information about a debtor, including credit history; and
banning collection of a fee from a debtor before the client and company have entered into the required written agreement.
The amendments raise the maximum fine under the Act from $1,000 to $1,500.
The new measures were developed after consultation with industry and the public.
Debt can be a serious issue and there are groups that offer help with debt solutions. This new legislation should make it more difficult for unethical companies to lead people with debt issues into greater financial trouble, said the minister.