Ontario Seeks Input on Proposed Regulation for New Consumer Protection Act

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In December 2024, the Ministry of Public and Business Service Delivery and Procurement (Ministry) posted the Consumer Protection Act, 2023: Consultation on Phase 1 Regulatory Proposals on Ontario’s Environmental Registry. The New CPA Regulation Discussion Paper included in this posting describes the Ministry’s planned approach for the supporting Regulation that will implement the New CPA and seeks input from interested parties. Below are several highlights.

General Contract Rules

There will be a core set of disclosure requirements for most consumer agreements, rather than the current approach that includes different requirements for a range of contract types. It is important to note that the New CPA and its supporting Regulation will not make substantial changes to the current rules related to credit agreements.

The new disclosure requirements for consumer agreements that are not credit agreements will include items that must be disclosed before the contract is made, as well as items to be included in the contract itself. Certain types of consumer agreements will include additional disclosure requirements. Examples are direct contracts (often thought of as door-to-door sales), direct contracts for “restricted products” (mostly HVAC equipment) and purchase-cost-plus leases. For these agreements, the core rules will apply, as well as the contract-specific rules applicable to the type of agreement. The Ministry is considering including mandatory disclosure rules related to any price escalations during the term of the consumer agreement.

Purchase-Cost-Plus Lease Rules

As explained in our previous article, the New CPA includes rules for purchase-cost-plus leases. These are defined as leases where the total amount payable exceeds 90% of the estimated retail value of the leased goods (presumably including installation). These purchase-cost-plus leases will include similar prepayment rights to credit agreements, so that a lessee will be able to “buy out” the leased goods at any time. The New CPA Regulation Discussion Paper provides some more details. The Ministry’s proposal is that a buyout would include the undepreciated portion of the value of the leased good at the time of cancellation, with the lessor also being permitted to charge six months of additional lease payments as part of the termination cost. As part of the initial lease disclosure, the lessor will be required to provide a buyout schedule. Additionally, there will likely be a standardized disclosure format provided in the New CPA Regulation or accompanying forms that will set out disclosure to be provided for each purchase-cost-plus lease.

Contract Amendments and Continuations

The New CPA Regulation Discussion Paper makes clear that the Ministry is planning to require more notice to and consent from consumers where a supplier makes changes to, or seeks to renew/extend, a consumer agreement (referred to as a “continuation”). The Ministry notes that “express consent” will be the “default option” where a change or continuation to a consumer agreement is proposed. Several exceptions are proposed, such as when a change is required by law or benefits a consumer.

Feedback, Implementation and Next Steps

The New CPA Regulation Paper does not indicate when the new Regulation will be published or when the New CPA will come into force. However, the Ministry does seek input as to how much lead time parties would need to implement the contracting and business process changes included in the New CPA.

The Ministry is also seeking input about whether some of the new consumer rights in the New CPA (and supporting Regulation) should apply to existing contracts. If that was the case, it would be a departure from the typical approach to implementation of new legislation.

In total, the New CPA Regulation Discussion Paper includes around 90 questions on which the Ministry is seeking feedback. Interested parties are invited to provide their input by February 10, 2025, at this link.

We will continue to monitor and report on the implementation of the New CPA. Please contact us if you have any questions.