Decision #51521-801Q403

File: 51521-801Q403

Compliance issue

Cost of Borrowing, credit cards — Failure to disclose all required information in a direct-mail advertisement
Bank Act, s. 450(1)
Cost of Borrowing (Banks) Regulations s. 21

A bank failed to properly disclose the interest rate in one of its French-language direct-mail advertisements, which included an application form for a credit card. The envelope used to promote the offer advertised the rate as “seulement” (only) while the actual offer was for a rate “aussi bas que” (as low as), meaning that the actual interest rate for the individual could be higher.

According to section 21 of the Cost of Borrowing (Banks) Regulations, a bank that advertises a credit card in an advertisement that makes a representation of the annual interest rate, or the amount of any payment or of any non-interest charge, in relation to the loan must disclose the annual rate of interest on the date of the advertisement and any initial or periodic non-interest charges at least as prominently as the representation and in the same manner, whether visually or aurally, or both.

Compliance measure(s) taken

A Letter of Reprimand^{Footnote 1}  noting one violation against the bank. 

Compliance considerations

Consumers who received the advertisement were mislead as to the applicable interest rate. The bank had no prior violations of these Regulations noted against it.

Corrective measures taken by financial institution

• Revised its verification procedures to avoid any similar errors in future.

Outcomes

It is important for consumers to have all the necessary information before making a decision to purchase a financial product. In this case, consumers were entitled to receive key information pertaining to the cost of the credit card. Informed consumers are in a better position to choose the financial institution and financial product or service that best suits their needs and banking habits. Facilitating comparison-shopping encourages healthy competition between financial institutions and promotes growth and innovation in the marketplace.