UCDA RESPONSE TO
Consultation Paper:
MOTOR VEHICLE DEALERS ACT, 2002
Proposals to Reduce Burden, Improve Regulatory Efficiency, and Protect Consumers
Name/Organization Name:
Used Car Dealers Association of Ontario
Contact Information (Email or Mailing Address):
Warren Barnard at [email protected]
Please also check a box to indicate whether you comment primarily as a:
☐ Registered motor vehicle dealer (please indicate registered name)
☐ Registered salesperson (you may provide your name)
☒ Industry association / stakeholder (please indicate name of organization)
☐ Consumer (you may provide your name)
☐ Consumer Association (please indicate name of organization)
☐ Academic
☐ Other – You may enter your answer here
Thank you for taking the time to review these proposals. If you have any questions about this consultation, please email [email protected].
Proposals
Reducing Burden at the Place of Business
A1. Removing the requirement for certain registrants to post their registration certificate and a sign
The ministry is proposing to remove the requirements for wholesalers, exporters, and brokers to post their certificate of registration and a sign with the dealer’s registered name at each place from which the dealer trades.
Under section 29(1) of O. Reg. 333/08, all dealers, except for outside Ontario dealers, lease finance dealers, and fleet lessors, are required to post their certificate of registration at each place that the dealer is authorized to trade so that the public is likely to see it.
Under section 30 of O. Reg. 333/08, all dealers, except for outside Ontario dealers, lease finance dealers, and fleet lessors, are required to post a sign that displays the dealer’s registered name and that is difficult to remove at each place that the dealer is authorized to trade.
The requirements for general dealers to post their certificate of registration and a sign in the dealer’s authorized place to trade would be maintained.
There may be a risk to consumers who trade with exporters and interact with brokers, as they may not know immediately if they are dealing with a registered dealer or salesperson if they do not see a certificate or sign posted in plain view. However, this is mitigated by the fact that:
these classes of dealers are more likely to have limited interaction with the public and will typically deal remotely with consumers (e.g., by phone, email, etc.);
dealers would still be required to produce the certificate to anyone who requests it; and
OMVIC offers an online search tool where consumers can check to see if a registrant is actively registered.
It is anticipated that this proposal will save wholesalers, brokers, and exporters the cost of framing and posting of the certificate and the costs of sign creation and posting.
An alternative option that the ministry could explore would be removing the requirement to post their certificate of registration at the place the dealer is authorized to trade for wholesalers, brokers, and exporters who do not trade with consumers. This would mitigate the possible consumer protection risk. However, the ministry has heard that it is very difficult to determine which exporters trade with consumers and therefore this requirement would be very challenging for OMVIC to enforce effectively.
A1. The UCDA does not understand who would be asking for this and how it would benefit consumers. The risk to consumers, referred to by the Ministry itself, is too great for the reward of eliminating signs. It seems to go against common sense for anyone to want a registered dealer to be more difficult to locate or identify. If anything, more transparency should be required to ensure that such dealers are operating properly and are easily located.
The requirement to post an easily obtained and affordable sign hardly seems an onerous or daunting requirement for any legitimate business. We also have to correct the notion that brokers and exporters have “limited” interaction with consumers. Exporters source their inventory from consumers, more now than ever given how tight supply is in the used vehicle market, and brokers deal with consumers as they are their stock in trade.
Finally, we reject out of hand the concept that a dealer who deals with the public “remotely” would be under less of an obligation to maintain proper registered premises where they can be found and identified than any other dealer who trades with consumers. To the contrary, such remote dealers cause us to conclude the need for this obligation is even greater. We certainly agree with OMVIC that the alternative proposed is unworkable.
A2. Removing the requirement for registrants to return their registration certificate
The ministry is proposing to remove the requirement for all registrants to return their certificate of registration when ceasing to be a registrant.
Currently, under subsections 29(7) and 29(8) of O. Reg 333/08, registrants are required to return their certificate to the registrar.
The ministry has heard that this provision is very difficult to enforce. Compounding this difficulty is the fact that OMVIC has been issuing electronic certificates to registrants since March 2020. These factors have made the requirement for registrants to return their certificate of registration outdated.
It is anticipated that this proposal will save registrants the cost of returning the certificate back to OMVIC (e.g., mailing).
There may be a risk to consumers that dealers or salespersons who are no longer registered would retain their certificate and use it to act as a registrant.
To mitigate this risk, OMVIC could increase its public education efforts to ensure that consumers are made aware of the online search tool that consumers can use to check to see if a registrant is actively registered.
A2. The UCDA supports this proposal.
A3. Allowing exporters to trade from a dwelling
The ministry is proposing to allow exporters to trade from a dwelling.
Currently under subsection 28(6) of O. Reg. 333/08, with the exception of dealers registered as only wholesalers or brokers, a dealer’s place at which it is authorized to trade shall be separate from a dwelling. Excepted dealers who trade from a dwelling need to store their records at a place approved by OMVIC’s Registrar that is not a dwelling.
This proposal is intended to provide cost savings to exporters – e.g., the cost of commercial office space, etc. – though the amount of potential cost savings is unknown.
The ministry has heard that most exporters do not trade with consumers and their activities more closely resemble that of wholesalers. Consumers that would purchase directly from an exporter are located outside Ontario. Currently, there are 106 exporters registered with OMVIC. This proposal
may pose a risk to consumers that sell to an exporter as they may not be able to access the dwelling to contact the dealer in person.
An alternative option the ministry could explore would be to only allow exporters that do not trade with consumers to have their office in a dwelling. However, as noted above, it is very difficult to determine which exporters trade with consumers and therefore this requirement would be challenging for OMVIC to enforce effectively.
A3. The UCDA is adamantly opposed to any dealer that trades with the general public being permitted to operate from a dwelling. We have never heard anyone actually ask for this within or outside the industry. Our concern is that this change is simply deregulation for the sake of deregulation and without any public policy basis. As we have stated earlier, exporters buy vehicles from the public regularly, and more so now than ever. The Ministry says it has “heard” that most exporters do not deal with the public, but we would like to know the source of this information? Affordability is simply not an issue, as exporters make good profit on vehicles they sell overseas for sometimes 3 and 4 times what they pay for the vehicle in Canada. We note with interest that the Ministry believes that if the consumers who buy from exporters are overseas there is no need to have a commercial premises. We respectfully disagree. Whether the consumer is ‘there’ or ‘here’ they need to be able to access the business’ office, know where they are located and deal with them as a proper business in the event of problems. It also saves OMVIC the bureaucratic and administrative burden of requiring search warrants to enter private property and will avoid the blowback from individual municipalities who will not want such businesses operating from residential neighbourhoods. Once again, while acknowledging that there is a risk to consumers under this proposal, we fail to understand why the Ministry would contemplate doing this?
Reducing burden in the day-to-day operations of registrants
B1. Extending the time period for the return of warranty documentation and payments received
The ministry is proposing to extend the period of time for dealers to provide a warranty seller with required warranty documentation and payments received from seven days to thirty days.
Currently, under section 47(7) (c) of O. Reg. 333/08, seven days after entering into the contract for the warranty, dealers are required to provide the warranty seller with all available documentation detailing the contract, all payments the dealer has received from the purchaser, and a statement that describes the condition of the vehicle and the distance the vehicle has been driven, if available.
The ministry has heard that it is difficult for dealers to provide the required documentation and payments received within the seven-day period and that 30 days is more aligned with industry practice. The ministry has been told by the motor vehicle dealer industry that warranty sellers often require dealers to submit warranty payments and documentation on a monthly basis.
OMVIC has indicated to the ministry that this proposal would have no impact on consumers.
It is believed that this proposal would potentially reduce burden on registrants, but the potential cost savings for registrants are unknown.
B1. The UCDA supports this proposal, in principle. It has never been realistic to expect a 7 day turnaround on warranty remittances. The warranty companies generally operate on a 30 -day invoice turnaround period and did not push for the 7 day payment cycle in the first place.
Having said that, we understand the original thinking behind the 7 day payment requirement. There will always be a risk that unscrupulous registrants will collect fees from customers for third party warranties and then not submit the premium to the warranty provider, in the hope that the customer would never require the use of the warranty and never be aware of any issue. This risk is present regardless of the turnaround time, but the longer that time, the more likely it is to happen without it being discovered.
So, while we support the time extension, we would suggest that OMVIC strongly encourage dealers to comply with the prescribed time period and to closely monitor and enforce the revised provision through random checks and enforcement. While 7 days has been quite an onerous requirement for some dealers to meet, 30 days is not. Of course, it should go without saying, that any dealer would remain free to remit funds within a shorter time frame than 30 days. should they wish to. We anticipate that many would.
B2. Removing the requirement for a telephone number in certain advertisements
The ministry is proposing to remove the requirement for registrants to provide a telephone number in certain advertisements.
Under subsections 36(2) and 36(3) of O. Reg. 333/08, advertisements that attempt to induce a trade in a motor vehicle must include, in a clear, comprehensible and prominent manner, a registered name and the business telephone number of the motor vehicle dealer.
The exceptions to this requirement are if the advertisement indicates it is being placed by a registered motor vehicle dealer and if the medium has practical limitations on the amount of information that can be included – e.g., a classified advertisement in a newspaper or magazine, a radio or television advertisement, or an advertisement displayed on a billboard or bus board.
Under this proposal, impacted advertisements would still need to note a registered name of the registrant.
This would bring Ontario into alignment with other provinces where a business telephone number is not required in advertisements.
OMVIC and the ministry believe that this proposal may provide cost savings to registrants that are advertising. Dealers can still include their business phone number in the advertisement if they wish. This will also modernize the regulation as telephone numbers are not always the preferred method of communication for consumers.
It is believed that this proposal would have little impact on consumers. The requirement to provide a dealer’s name and address in a lease or contract would be maintained.
B2. Similar to the proposal to allow operations from dwellings, why would anyone argue that a dealer should not provide phone numbers in advertisements? It seems counter-intuitive to make dealers more difficult to contact. Moreover, why a dealer would want that in the first place should raise concerns for consumers. It is suggested this will have little impact on consumers, but we do not agree. If you are trying to contact a dealer it could certainly have a great impact. The argument this will save dealers money might have made sense 20 years ago when they paid by the line for print ads. However, dealers advertise digitally these days and the idea that not requiring a telephone number will result in dealer savings is spurious. Also, when a phone number is used in an ad it helps to identify who has placed the ad or who is responding to it, as sometimes those numbers lead OMVIC to unregistered salespeople/curbsiders. Interestingly, at one time OMVIC had stopped supplying phone numbers for wholesalers on their public database for “find a dealer” but they very soon reverted back to providing those numbers, likely because OMVIC realized making wholesalers virtually impossible to contact was counter-productive. One question we have is what is meant by “business telephone”. If the proposal was to eliminate a requirement to have a “landline”, and allow a cell phone number instead, that could save dealers money and we could support that.
B3. Exploring changes to required disclosures in a contract
The ministry is exploring updating the requirements for certain disclosures that a dealer needs to include in a contract of sale or to lease a motor vehicle with a consumer.
Sections 39, 40, 41, and 42 of O. Reg. 333/08, among others, require dealers to include a number of items in the contract with a consumer depending on if the transaction is the sale of a new vehicle, used vehicle or a lease. Similarly, under section 5 of O. Reg. 332/08, dealers are required to list a number of items in a contract for sale or lease with another dealer. Please see Appendix I for the relevant sections containing these required disclosures.
The ministry has heard from industry that some of the information required to be disclosed by the regulation is difficult for the dealer to know or obtain. For example, dealers may not be able to determine if a used vehicle was registered in another jurisdiction in the past seven years. Additionally, the ministry has heard from industry that consumers may not be concerned with certain information elements that are required in a contract.
However, the ministry has also heard from OMVIC that the required disclosures in contracts are very important pieces of information for consumers and provide significant protection for consumers. For example, information on where a used vehicle was previously registered provides vital information to the consumer if the vehicle was registered in a jurisdiction that may have different vehicle safety standards than Ontario. Therefore, removing requirements to provide any such disclosures may pose a risk to consumers that they may not be fully informed about the vehicle they are purchasing.
Additionally, OMVIC noted that the fact that dealers are required to provide this information to consumers in a contract gives them a competitive advantage over private sellers who are not required to provide this information to consumers. Consumers may be more likely to buy from a dealer if they are comfortable they have received the information they need about the vehicle as required by the MVDA and its regulations.
The ministry is interested in receiving feedback on how the current contract disclosure requirements are working in practice and if there is an opportunity to improve them.
B3. There are opportunities to tighten up disclosure requirements in the MVDA Regulations. The Ministry has pointed to one such opportunity, in the area of out-of- province vehicles. While one could argue it is irrelevant to a consumer if a vehicle was registered in Quebec or Manitoba 6 years ago (presumably, it would not bother consumers in those provinces either), it might be difficult for a dealer to be aware of this many years later in Ontario, and additionally, they should not have to declare it. OMVIC’s concern about different safety standards in other provinces, assuming that concern is justified, would have less relevance after a vehicle has been on the road for months or years after arrival in Ontario. Having said this, if the Ministry wishes to maintain some degree of declaration, then it should establish a similar process to that which applies to rental vehicles; if not previously owned by a consumer in Ontario, then it must be declared.
With the advent of UBER and LYFT, the whole area of rental / taxi vehicles might need to be revisited, as well as police cruiser/emergency vehicle disclosure. If someone is required to declare a previous rental not owned by a consumer, why would this not apply to other vehicles used for “hire”? The main reason of course, is that no buyer would know that use was made unless the seller informs them. The same can often be said for rental vehicles of course, which raises the question whether the need to declare rental vehicles might be removed entirely. It was never accurate to say any of these vehicles are less trustworthy than other used vehicles and, in fact, they are probably maintained by owners better than many privately owned used vehicles, as those owners have a vested interest in preserving retail values.
Remove delivery date requirement: This requirement is more honoured in the breach. Most dealers and consumers conclude deals with that field in a sale agreement left blank as both sides know the vehicle will be made ready in a reasonable time. Sometimes that schedule can vary due to holidays or mechanic availability or schedule, so some flexibility is needed. Rarely do we receive complaints on this score.
Remove CAMVAP requirement: It applies to relatively few used vehicles, there are fewer and fewer manufacturers participating (even Chrysler is out now) and in any event, if consumers are properly educated, the bill of sale is not where they will learn about the existence of CAMVAP. The MVDA’s CAMVAP requirement does little to help consumers who do not read their contract in order to be aware of this information.
UCDA opposed the requirement to require a declaration about repair costs greater than $3,000 when it was first introduced in 2010. Our recommendation was not implemented and what we said would happen has happened in that some dealers feel that if a vehicle repair is under $3,000, they do not have to declare a prior incident. We felt, and still feel, material fact disclosure is more flexible and workable, but, at a minimum, if the Ministry must maintain a dollar threshold, we suggest it be raised to $5,000. In 2021, it takes very little damage to result in repairs amounting to $3,000. On some vehicles, a single damaged headlight can cost close to $2,000 to replace.
Remove replaced panels disclosure: The mere fact that two or more body panels have been replaced, other than bumper panels, is of no interest to a consumer. Previous accident damage is of concern to a consumer and that is already covered. Panels can be replaced due to rust, body-work or other cosmetic reasons and should not be a stand-alone declaration absent any material fact background.
B4. Allowing registrants to conduct business at a location outside of the place of business
The ministry is exploring proposals to allow a registrant to trade at a place outside of the place authorized by their registration.
Under subsection 28(4) of O. Reg. 333/08, registered motor vehicle dealers other than those only registered as brokers shall not trade except from a place authorized by the dealer’s registration with some exceptions.
The ministry has heard from OMVIC that it does not consider a test drive at a consumer’s home in contravention of the MVDA, provided there is no trading occurring outside of the place of business. “Trade” as defined under the MVDA includes buying, selling, leasing, advertising, or exchanging an interest in a motor vehicle, or negotiating, inducing, or attempting to induce the buying, selling, leasing, or exchanging of an interest in a motor vehicle.
The ministry was informed by industry that when dealer showrooms were ordered closed during the COVID-19 pandemic, it was very difficult for dealers to complete transactions. Compounding this issue is that a financial institution often requires a physical signature(s) on financial documents. Dealers had to courier paperwork rather than simply deliver and pick up the paperwork in person at a consumer’s home.
The ministry has also heard that there is growing demand among consumers for trading outside of the place of business (For example, for the purposes of signing a contract with the convenience of not having to leave one’s home).
Consideration must be given to the risk that this proposal could bring to consumers. Consumers may feel more pressured to complete a transaction or sign a contract at their home rather than at a place of business they can voluntarily leave at any time.
The risk to consumers could possibly be mitigated by requiring consumers to write and sign an authorization that names a registrant, allowing them to trade at a location of the consumer’s choosing. A requirement that the consumer has had previous interaction with the registrant (at the registered place of business or remotely – e.g., by phone) and makes a request for the registrant to come to a location outside of the place of business could also be considered to mitigate registrants seeking out consumers at their homes.
Other legislative frameworks provide certain protections for consumers under similar circumstances. Under the Consumer Protection Act, 2002, transactions that are negotiated or concluded outside of a supplier’s place of business (for example, at a consumer’s home) known as direct agreements, are subject to other requirements to mitigate the risk to consumers, such as a required 10-day period where a consumer can cancel the agreement without any reason beginning the day the consumer receives a written copy of the agreement.
B4. When we first encountered this proposal, we wondered, if it goes forward, why ANY dealer would need a physical address anymore. We have used the phrase ‘deregulation’ and we use it again here. We fail to understand the public policy reason for proposing to remove a cornerstone of the professionalism brought to this industry as long ago as the 1960’s and that the industry and OMVIC have worked hard to improve upon since the 1990s. A proper business premises is a key factor in separating motor vehicle dealers from less savory illegal private sellers and ‘fly by night’ curbsiders. Taken to its logical conclusion, a dealer would be able to conduct business remotely, electronically and virtually, and consummate a sale with whatever paperwork is required in the consumer’s driveway or in their kitchen.
OMVIC would presumably be able to inspect the dealer and their paperwork at some acceptable location and inventory would be stored at any number of commercial storage lots or parking compounds. Dealers would operate like Amazon or Casper mattresses and never have to invite a consumer to their “dealership” because there would not be one.
Here are the problems and why we find this so unacceptable:
Consumers will not know for sure who they are really buying from or dealing with. This problem exists now on financed deals and this will grow even worse if this proposal carries.
Consumers will not be able to contact the dealer in the event of a problem. It is very easy to change cell phone numbers, ignore emails and texts, or letters. It’s not like they are standing in front of you, as there is no place to do that.
Consumers will not fully appreciate the serious nature of the contract they are entering into if it’s as easy as ordering a pizza or a pair of shoes.
Local by-laws and municipalities will not allow such operations to be conducted from private dwellings, nor should they. No one wants to live next to a house with cars constantly coming and going and test drives being taken on roads where children are playing.
Insurance concerns will arise in respect of liability for homeowners in the context of off-site sales. Insurers will be concerned if this proposal is implemented.
This proposal, if implemented, will encourage even more free-wheeling by curbsiders and unregistered salespeople who cannot be identified or located after the sale.
Section 4 was meant to ensure the industry would be taken seriously and viewed as a profession by the public. The policy objective was that dealers would have a proper place of business to conduct transactions, and not operate out of trailers, sheds, the trunks of their car or, worse, nowhere at all. It was established in the 1960’s and has rightly survived MVDA regulatory review in 1972 and again in 2010.
The basic concept has been watered down in recent years and recently we have seen dealers approved by OMVIC like Clutch Canada Inc., whose “dealership” consisted, at one point, of a sign in the window of a room in another dealer’s business. ‘Buy with Confidence’ indeed.
The struggle now is to ensure that the distinction between credible motor vehicle dealership businesses and virtual curbsiders / private sellers is not further blurred, so that there is no doubt which side of the line dealers fall on.
Operating from an identifiable premises that meets prescribed minimum requirements, provides a sense of permanency and legitimacy to the dealer. Financial institutions and insurers expect that is where fraud prevention will begin and end, with vehicle record, buyer identity and credit-worthiness confirmation performed on site.
Just to be clear, this is not like selling over the internet or by email, something that has been going on in one form or another for years, long before “disruptors” or disasters like COVID came along. We realize that fighting that reality is just tilting at windmills. Having said that, when these kind of sales have been practiced by professional dealers, it is with the knowledge that behind the dealer there is an identifiable place of business, adding confidence to the purchaser’s decision to buy, knowing that they have somewhere to go back to in case things go wrong.
So, to summarize, s. 4 (2) is there because the public, financial institutions, insurers, regulators, the government, the media, and stakeholders want it there. So do we. To suggest otherwise poses unnecessary risks to consumers, and asking them to sign away those protections (as this proposal suggests) hardly addresses these grave concerns. We cannot, and will not, support this proposal as it is being framed.
C1. Updating advertising requirements related to the sale of “as-is” vehicles
The ministry is exploring a proposal to specify that the advertised price of a vehicle include the cost of required repairs in order for a vehicle to pass an inspection and be issued a safety standards certificate.
Currently, under section 36(7) of O. Reg 333/08, an advertisement that indicates the price of a motor vehicle, must set out the price in a clear, comprehensible and prominent manner and the price shall be set out as the total of,
the amount that a buyer would be required to pay for the vehicle; and
all other charges related to the trade in the vehicle, including, if any, charges for freight, charges for inspection before delivery of the vehicle, fees, levies, and taxes, with some exceptions (e.g., if the advertisement is placed jointly by two or more dealers and a charge varies between dealers).
As-is vehicles are those vehicles which are not in roadworthy condition and do not have a current safety standards certificate under the Highway Traffic Act. A safety standards certificate confirms that a vehicle met the minimum safety standards set out under the Highway Traffic Act on the date the certificate was issued. Vehicles can be registered without a safety standards certificate, but a vehicle cannot be issued licence plates without a certificate. To get a certificate, the vehicle must pass an inspection at an inspection station licensed by the Ministry of Transportation (MTO).
Under O. Reg 333/08, vehicles with a current standards safety certificate cannot be sold as an as-is vehicle. Contracts of sale for as-is vehicles must include the following statement:
The motor vehicle sold under this contract is being sold “as-is” and is not represented as being in road worthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the purchaser’s expense. It may not be possible to register the vehicle to be driven in its current condition.
The ministry has heard that some dealers will advertise vehicles at the as-is price but offer to charge extra costs for necessary repairs so that the vehicle can pass an inspection to be given a safety standards certificate. These extra costs may be included in an advertisement, but in a manner that is separate from the vehicle price and not in a clear, comprehensible, and prominent manner (e.g., only noted in the “fine print”). Consumers may feel pressured to pay the extra unadvertised costs for the repairs in order for the vehicle to pass an inspection and be given a safety standards certificate. These repairs may cost hundreds of dollars. Additionally, a dealer selling a similar vehicle that includes the cost of necessary repairs in an advertised price may not attract consumers, as the dealer may be advertising a higher price as a result.
C1. The sale of vehicles on an As Is basis has long caused confusion for both consumers and dealers. Many consumers think buying such a vehicle is the same as buying a vehicle without a safety certificate, and quite simply that is not the case. The dealer knows little about the unit and the consumer accepts all the risk that the cost to get it on the road someday might exceed their reasonable expectations. To expect a dealer to put a price on what it would cost to certify such a vehicle is ludicrous and unworkable. How could any dealer possibly know what number to put on such a unit? In fact, it feeds into the incorrect assumption that all such a vehicle needs to get on the road is a safety certificate- and that is often far from the truth. Similarly, many dealers do not understand what an “as is” sale really is. Not “roadworthy” could mean the vehicle might need new a water pump, a transmission, frame work, body work, engine or electrical work and not just minor work such as determining whether the horn works or the headlights are operating,
C2. Increasing the minimum fine for acting as a registered motor vehicle dealer or salesperson
The ministry is proposing to increase the minimum fine for the offence of an unregistered person acting as a motor vehicle dealer or salesperson from $2,500 to $5,000 (Subsection 32(4) of the MVDA).
Currently, under the MVDA, the general penalty for all offences is a fine of not more than $50,000 and/or imprisonment for a term of not more than two years less a day for an individual and a fine of not more than $250,000 for corporations. The MVDA specifies a minimum fine of $2,500 for the offence of acting as a dealer or salesperson while unregistered.
Fine amounts under the MVDA have not changed in over a decade and the violation of an unregistered person acting as a registrant is still taking place too often in the sector.
OMVIC informed the ministry that over the last five years there were approximately 30 convictions each year for “curbsiding” (acting as a motor vehicle dealer while unregistered).
From 2018 to 2020, OMVIC laid an average of 334 charges against alleged curbsiders per year. This is an average of about 60 per cent of all charges laid by OMVIC over that period[1].
“Curbsiding” and acting as a salesperson while unregistered continue to be common issues in the marketplace. The increase to the minimum fine for this offence would act as a deterrent and provide a more appropriate minimum penalty for those who attempt to deceive consumers.
C2. The UCDA supports this proposal as it applies to unregistered dealers i.e. curbsiders. We are concerned about unregistered salespeople, however. Many times, and OMVIC can confirm this. Renewal dates can be missed due to sloppy record keeping or through inadvertence. We would think it might work an injustice to level a $5,000 fine on an established and previously registered salesperson who accidentally carried on selling, not realizing that the renewal was missed. No consumer harm would result from such inadvertent and unintentional error in any event.
Enhancing Registrant Compliance and Improving Regulatory Efficiency
D1. Providing OMVIC with the ability to assess administrative monetary penalties (AMPs)
The ministry is considering proposing giving OMVIC’s Registrar, or a person appointed by the Registrar, the ability to assess administrative monetary penalties (AMPs) up to a maximum amount (e.g., $10,000, $25,000) with respect to certain violations, to be determined (e.g., specific provisions such as failure to submit required documents to the Registrar).
An AMP is a civil financial penalty for failure to comply with a legal requirement in a regulated sector and can be used to promote compliance with the legislation. AMPs offer a lower-cost and quicker response than other enforcement actions, such as prosecution or a suspension of registration. AMPs are suitable for violations that are easily proven without extensive inspection or investigation (e.g., if a required sign was not posted).
A corresponding appeal mechanism, for example to the Licence Appeal Tribunal, would also be established. If the ministry were to move forward with such a proposal, it would also consider providing authority through a regulation for the Minister of Government and Consumer Services to direct that the funds from administrative monetary penalties go into the Motor Vehicle Dealers Compensation Fund or a fund for the purposes of supporting consumer education.
When a registrant fails to comply with the MVDA or its regulations, or when OMVIC receives a complaint about a registrant, several courses of action are open to OMVIC.
The Registrar of OMVIC can require a registrant to provide information and can issue a warning, require a registrant to take educational courses, refer the matter to the Discipline Committee, or take steps to suspend, revoke, or refuse registration. If the Registrar finds that a registrant has failed to comply with the Code of Ethics, the Discipline Committee can order a registrant to take educational courses, to pay fines, and to pay associated enforcement costs to OMVIC. In addition, OMVIC can conduct investigations and lay charges under the MVDA and its regulations and the Consumer Protection Act, 2002.
The ministry is considering whether OMVIC currently has adequate compliance and enforcement powers. AMPs are a modern regulatory tool that is being used more frequently by regulators in Ontario and other jurisdictions to promote compliance, including vehicle sales regulators in Alberta and British Columbia. . Under British Columbia’s Motor Dealer Act, the maximum amount for an AMP is $100,000 for a business or corporation and $50,000 for an individual[1]. In Alberta, the Director of Fair Trading can impose an AMP of up to $100,000 on a business or an individual[2]. In Ontario, administrative authorities such as the Technical Safety and Standards Authority (as of July 1, 2022), Resource Productivity and Recovery Authority, and the Retirement Homes Regulatory Authority can issue AMPs.
AMPs could increase regulatory efficiency by allowing the regulator to assess a monetary penalty as an alternative to prosecution. AMPs could provide more flexibility and a more measured way for OMVIC to encourage compliance among registrants, especially in cases where suspension or revoking a registration would not be appropriate. Due to the speed with which they can be issued, AMPs are seen as a particular useful tool for deterrence. As some registrants are motivated to not comply with the regulations for financial gain, AMPs can provide an effective financial deterrent for non-compliance.
AMPs can allow for a more responsive and proportionate sanction, as well as an effective deterrent, for some forms of non-compliance than currently available to the regulator.
If the ministry decides to pursue this proposal, details on the administrative monetary penalty framework (e.g., which non-compliant behaviours AMPs would apply to, and AMP amounts) would be subject to an additional public consultation at a later date.
D1. The UCDA is vehemently opposed to this proposal, as the Ministry is well aware. As recently as 2020 we were assured that the Ministry had no intent to pursue this avenue by granting OMVIC the ability to use AMPs, first proposed in 2012, yet here it is, being raised once again.
To fully understand how such a proposal would affect our 5,000 motor vehicle dealer members, one must first appreciate how heavily regulated our industry already is. The proposal is vague with regard to due process and the infractions that would trigger AMPs and the case has not been made that AMPs are necessary or would contribute in any meaningful way towards improved consumer protection especially in the automotive industry.
Existing Regulation of the Automotive Industry
The powers of the Panel include:
• Requiring dealers and salespeople to take education courses
• Requiring dealers and salespeople to pay for such courses
• Ordering fines as high as $25,000
• Ordering costs to be paid to OMVIC by the dealer or salesperson
Decisions of the Panel, whether as the result of settlement or by order of the Panel, are published online and updated regularly at http://www.omvic.ca/portal/DealersSalespersons/EnforcementCompliance/DisciplinaryProcess/DisciplineDecisions.aspx which also identifies the registrants who have been disciplined. The benefit to consumers being made aware of discipline panel decisions is quite apparent. However, it is hard to imagine what benefit would arise from, ‘naming names’ for minor infractions amounting to a few hundred dollars or for first-time AMP offenders.
There is even a meaningful appeal process written into the MVDA, 2002, allowing registrants the opportunity to question discipline decisions they feel are wrong or unfair. Justice is not only done, but seen to be done, in a system that affords registrants due process.
The deterrent effect of the discipline process also far exceeds what is proposed by the Ministry in terms of the use of AMPs.
The Ministry does not need an intermediate penalty positioned between a simple warning and a prosecution or registration suspension … it already exists in our sector.
The Proposal is Vague and Lacks Due Process
The imposition of fines under the proposed AMP process could range from $100 to as high $25,000. With such large potential penalties, courts would expect a high degree of natural justice to be extended to a registrant by an administrative authority. We anticipate that this process would become cumbersome and bureaucratic with procedures more closely aligned with a court or tribunal format. Otherwise, challenges to the law by way of judicial review will surely ensue.
At a minimum, the accused registrant will have to be given notice of the case against it, the chance to have their side heard and some kind of reasons for any decision reached.
The actual framework will be left to regulators to design. This means more uncertainly for registrants as they wait to learn what AMPs will apply in which situations. It is entirely unclear what input, if any, would be afforded to the regulated by the regulator.
The other problem is fairness. Individual administrative authorities may have very different approaches to their use of AMPs meaning registrants will not be treated equally under the law, with different standards for the same conduct, which could give rise to Charter challenges, as well as confusion. The same registrant could find itself treated very differently by different regulators, or the Ministry, under the same legislation, or subject to multiple AMPs, for the same infraction.
While a route of appeal to the Licence Appeal Tribunal could be afforded to AMP defendants, it is a hollow victory if they have to spend more than amount of the fine on a lawyer and cannot recoup their costs, as LAT rarely awards costs to dealers.
Such a draconian approach is not needed, justified or desirable for our industry.
The Proposal is Unnecessary
Registrants will almost certainly view this proposal as a cash grab … and it’s hard to argue that it isn’t. Dealers already know and see the full power of OMVIC as it affects their operations, and their costs. Great strides have been made in the motor vehicle dealer sector to improve the industry for the better. This proposal promises little in the way of increased consumer protection, but risks much.
AMPs take the regulator further away from a positive working relationship with its registrants. The benefits of education and training, of building relationships and the notion that the administrative authority is there to work with the registrant community to improve professionalism and integrity will be compromised. Instead regulators like OMVIC, will seem more like mere enforcers to the regulated.
For example, a salesperson who cannot produce their salesperson registration card could be fined on the spot by OMVIC – issued a ticket like a police officer would issue to a jaywalker. This might ensure the registrant will carry his card next time, but at what cost to industry perception of the regulator? Perhaps the larger question is: how is consumer protection improved by such a measure? OMVIC knows who its registrants are without being shown an ID card. Most consumers would be unaware such a card even exists, and yet there will be an AMP for no reason other than to allow the regulator to issue one … and collect money where an infraction occurs.
OMVIC’s present approach and the rules guiding it have achieved more positive progress in this industry than AMPs could ever hope to do.
Summary
As mentioned earlier, a more appropriate use of AMPs, or such other regulatory mechanisms that enable OMVIC to impose a fine or issue a ticket on the spot, may be in relation to non-registrants. Trading in vehicles without registration as a dealer or salesperson poses serious consumer harm and we could support a careful consideration of such options. Prosecution of such offences remains OMVIC’s only option, and it is a significant drain on OMVIC’s resources in terms of cost and manpower.
The present proposal would make OMVIC judge, jury and executioner over its registrants, with little or no right to due process.
It also remains to be shown that AMPs actually increase compliance, as is often suggested by regulators. We have seen scant evidence that this is the case. It seems unlikely to obtain greater benefits for consumers than what OMVIC is already doing.
At the end of the day, the potential benefits offered by an AMP approach are far outweighed by the costs in terms of relationships, complexity and bureaucracy.
OMVIC does not need an intermediate penalty positioned between a simple warning and a prosecution or registration suspension … it already exists in our sector. Even the Ministry acknowledges this in the proposal stating “when OMVIC receives a complaint about a registrant, several courses of action are open to OMVIC.”
If the motor vehicle regulatory regime is to include AMPs, their use must be restricted to clearly defined issues, where significant consumer harm might be expected to result and where there is no reasonable argument to defend against the allegation, other than the use of due diligence.
If the Ministry is determined to implement AMPs in our sector, a course of action that we hope will not happen, we would like to be involved in their design to ensure the concerns we have outlined are addressed.
D2. Adding provisions to the Code of Ethics
The ministry is considering whether specific requirements that are found in the General regulation should be added to the Code of Ethics regulation.
The Code of Ethics regulation (O. Reg. 332/08) made under the MVDA contains requirements for registered motor vehicle dealers and salespersons to act with honesty, integrity, and fairness in carrying on business.
For example, registered motor vehicle dealers and salespersons must be clear and truthful in describing the features, benefits, and prices connected with the motor vehicles in which the registrant trades and in explaining the products, services, programs, and prices connected with those vehicles.
If the Discipline Committee makes a determination that a registrant has failed to comply with the Code of Ethics, it may order any of the following, as appropriate:
Require the registrant to take further educational courses.
In accordance with the terms that may be specified by the committee, require the motor vehicle dealer to fund educational courses for salespersons employed by the dealer or to arrange and fund such educational courses.
Impose such fine as the committee considers appropriate, to a maximum of $25,000, or such lesser amount as may be prescribed, to be paid by the registrant to the administrative authority.
Suspend or postpone further educational courses or the imposition of the fine for a designated period.
Fix and impose costs to be paid by the registrant to the administrative authority.
It may be appropriate to update the Code of Ethics to include specific requirements currently in the General regulation in the Code of Ethics regulation.
For example, under subsection 36(7) of the General regulation, advertisements that indicate the price of a motor vehicle must set out the price in a clear, comprehensible, and prominent manner and include the total amount a buyer would be required to pay for the vehicle including charges for freight, charges for inspection, fees, levies, and taxes. The same requirement may be appropriate to include in the Code of Ethics regulation.
D2. The UCDA is in favour of this Proposal. We would like to explore what requirements might be added to the Code of Ethics to strengthen wholesale fairness between dealers and at wholesale auctions where many of these transactions are conducted, and where many problems arise.
For example, if a dealer sells a vehicle to a dealer at the auction and the engine light is off, but it comes on after 48 hours, this cannot be arbitrated because the time for auction arbitration is only 48 hours. OMVIC has been reluctant to get involved in disputes between dealers as there is no consumer involved. If the buying dealer takes the selling dealer to court, the auction might bar the dealer from doing future business with the auction, so the dealer is left with no recourse.
If a dealer sells a vehicle to another dealer “as is”, the Regulations must make it clear that existing known defects must still be declared. Again, some auctions will not arbitrate any complaint on the sale of “as is” vehicles. If the law was clearer, arbitration rules would need to follow suit.
Here’s an example of the kind of issue that can pop up in a dealer to dealer sale, at auction or otherwise. The the law is clear that pollution controls must be functioning on all vehicles sold in Ontario. Yes, this seems to be a controversial proposition in some wholesale transactions, where “as is” is interpreted as meaning, “what you see is what you get”.
Making Housekeeping Amendments
The ministry is proposing housekeeping amendments to the MVDA and the General regulation. The intent of the proposed housekeeping amendments is to remove provisions that related to the transition from the previous version of the MVDA. These provisions are no longer relevant.
Examples of provisions the ministry is proposing to remove include:
Subsection 34(3) of the MVDA
This provision allows for fines for convictions under the previous Motor Vehicle Dealers Act to be payable under the current act.
Section 41 of the MVDA
This provision allows for those who were registered under the previous Motor Vehicle Dealers Act to remain registered under the current act until the time of their next registration renewal.
Section 10 of O. Reg. 333/08
This provision allows for transitional matters related to registration at the time the current MVDA came into effect in 2010 regarding which classes dealers would be registered under.
Section 88 of O. Reg. 333/08
This provision relates to claims to the Motor Vehicle Dealers Compensation Fund prior to 2010. OMVIC confirmed with the ministry that there are no outstanding claims from prior to 2010.
The UCDA understands and supports the housekeeping proposals.
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