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It was with deep concern that Credit Counselling Canada read the Office of the Superintendent of Bankruptcy (OSB) draft Directive No. 1R4, Counselling in Insolvency Matters on insolvency counselling in 2017.  As a stakeholder in the insolvency system, we submitted comments/suggestions as per the consultation process.  Despite these efforts, described here, Directive No. 1R4 was implemented in October 2018.

In 2018 and 2019, Credit Counselling Canada continued pressing the OSB office for change, and in July 2019 the OSB opened a consultation on draft Directive  No. 1R5 Counselling in Insolvency Matters and enhancements/revisions to be made to insolvency counselling.  The draft directive rolled back several of the provisions that were of concern in Directive No. 1R4, resulting in positive changes to the legislation.

  • Reduced the administrative burden for the not-for-profit/charitable credit counselling industry and provided for the removal of potential and perceived barriers for LITs to rely on qualified third-party counsellors;
  • Eliminated the requirement to request a variance;
  • Removed the requirement to audio record counselling sessions.

With this step in the right direction, we welcomed the opportunity to respond to the new draft directive with our comments. This is a summary of our submission. The full submission can be viewed here.

Directive No. 1R5 Counselling in Insolvency Matters was published in November 2019, and comes into effect in January 2020.


Credit Counselling Canada is governed by a volunteer board of directors. Our association members are accredited based on required governance, financial stewardship and operational standards. Given our expertise and credibility, members are often asked to provide expert opinions to the media as well as to governments contemplating legislative change.

Honesty, transparency, unparalleled expertise and professionalism are the basis of our members counselling services. We are not-for-profit and registered charities. We have been in operation for decades providing counselling services and money management education to individuals and families across Canada. For more than two decades we have offered counselling support services to trustees who do not have adequate resources, time or capacity to provide effective insolvency counselling services and develop quality educational material for their clients.  Trustees previously had flexibility to partner with not-for-profit/charitable credit counselling agencies to provide the legislated required debt counselling services to insolvent consumers.

We can assure the Superintendent that our association provides careful oversight and audits of our members who are required to track and report on performance data on the components of credit counselling programs. In addition, many of our members across Canada are already regulated in several provinces that have legislation requiring registration, licensing and oversight.

Our Perspective – Insolvency Counselling

While doors need to be closed to third party debt consultants who undertake to mislead consumers, helping Canadians who are in financial distress should be the overarching goal of debt counselling.

In terms of referral arrangements between trustees and debt counselling service providers, we agree that there should not be any closed-door arrangements. However, there is nothing inappropriate in trustees using external service providers that are highly competent, accredited and can provide quality counselling to indebted consumers.

We Request – An Exemption for Not-for-Profit Credit Counselling

By filing our response to the draft directive, we ask that the Superintendent implement a final directive that meets the objective of dealing with and eliminating inappropriate and harmful practices without causing unwarranted consequences for accredited not-for-profit/charitable credit counselling services and insolvent Canadians.

To achieve fairness, we again ask that accredited not-for-profit/charitable credit counselling services be granted a formal exemption from the proposed draft directive.

With over 50 years of respected collective history, we have helped hundreds of thousands of financially distressed Canadians across the country by improving financial literacy, providing counselling in making financial choices or in finding solutions to over-indebtedness. We are open to discuss applicable standards for all counsellors to ensure quality services are provided at a consistent level across Canada, including the concept of those standards being monitored/audited by the OSB.

We agree that there should be an effective monitoring and oversight framework to identify and address inappropriate behaviour and that it should include new powers for the Superintendent to issue administrative monetary penalties (AMPs).  AMPs would address infractions by trustees quickly in terms of non-compliance with new counselling standards whether the service is offered by the trustee or through an external service provider.

We appreciate the OSB giving us the opportunity to participate in this consultation.  As the OSB continues to refine the supervisory framework, we hope it will consider positively our suggestions so that quality services can continue to be delivered with integrity while respecting the right of trustees to use qualified external counselling services.

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