(March 16 – 11:50 ET) – The federal Department of Finance has released four model plain language loan disclosure documents, designed to make it easier for consumers to understand these types of agreements.

The four documents cover credit card applications, credit card agreements, personal lines of credit and vehicle loan agreements. Finance is encouraging financial institutions and retail loan providers to use these model documents as guidelines in developing their own plain language loan disclosure agreements. It notes that the need for plain language financial documents was first brought forward in the report of the Task Force on the Future of the Canadian Financial Services Sector, which was released in 1998.

“Canadians have told us that they want to be provided with clear, easy-to-understand information to help them make important financial decisions,” said Secretary of State Jim Peterson. “These model documents will help loan providers across Canada meet this need. The new documents will also help financial institutions meet the new harmonized cost-of-borrowing disclosure requirements, which will be applied to federally regulated financial institutions in the coming months.”

Following the policy paper’s release, a joint federal-provincial task force held extensive consultations with industry and consumer stakeholders on issues related to the development of model plain language disclosure documents. The information gained from these consultations was used to draft the model loan contracts, which have been tested with a wide range of consumers.

“This process is an example of how the federal government, provincial authorities and the financial services industry can work together to the benefit of consumers,” said Peterson.