11:15am ET | Doug Jones

GUEST – Doug Jones of BDO Canada Limited, Barrie Trustee in Bankruptcy

TOPIC – BDO Welcomes Ontario Government’s Move To Crack Down On Debt Settlement Companies

INFO – BARRIE, ON – January 7, 2013 – Stating that “there is evidence of harmful practices used by some debt settlement companies and that is why our government is taking steps”, the Ontario Liberal government announced January 4 that they will be looking to catch up with Alberta, Manitoba and Nova Scotia in cracking down on ‘debt settlement’ companies.

Legislation is reported to be coming to curb the behaviours of companies promising they can reduce credit card and other debt by as much as 70 per cent, while charging up-front, non refundable fees. Ontario Consumer Services Minister, Margarett Best has indicated the government will ban these companies from charging up-front fees, limit the fees these companies can charge consumers and mandate clearly worded contracts. The Consumer Services Ministry now receives about 70 complaints a month from people who have been charged several thousands of dollars before any work was done on their behalf. “We want to put a stop to abusive practices; consumers should know their rights before they sign contracts and make no payments until they get results,” stated Best.

The Ontario government’s proposed action comes on the heels of a consumer alert issued against these debt settlement companies by the Federal government’s Financial Consumer Agency of Canada in January of 2012, as well as numerous consumer investigation stories by varied media outlets over the year.

Barrie Trustee in Bankruptcy, Doug Jones of BDO Canada Limited welcomed the move by the Ontario government in stating “this is a very positive move by the government in protecting our local citizens, as well as all Ontario residents. Sadly, my offices in the region have seen too many cases of people having spent a significant amount of money in fees to these companies, only to find out they had legal actions taken against them, like liens on their homes, despite paying thousands to these companies. Consumers need to learn about legitimate debt solutions that prevent bankruptcy, like the consumer proposal, and not get caught up in what the federal government called ‘too good to be true’”.

Background References:

The current Ontario government proposal.

The Financial Consumer Agency of Canada’s January 2012 consumer alert.