Digital Dealership Registration

Digital Dealership Registration (DDR) - WEBINAR EVENT!!!

The Ministry of Public and Business Service Delivery (MPBSD) and the Ministry of Transportation (MTO) have asked the UCDA to pass on this important message about an upcoming webinar opportunity to learn more about the DDR program:

You’re Invited!

Join us to learn more about Digital Dealership Registration!

The MPBSD, in collaboration with the MTO, will be hosting a webinar on the DDR program.

DDR is a web-based application that enables dealerships in Ontario to complete vehicle registrations online and limit the need for dealers to visit ServiceOntario centres. It is integrated with existing systems to facilitate a fast, easy, and secure way to register a customer who has purchased a new or used vehicle.

The event will be taking place on: Tuesday November 14th, 2023, and Thursday November 16th, 2023, from 1:30pm – 2:30pm and will include of a walkthrough of DDR, how to sign up and address commonly asked questions about the platform.

Please ensure that you meet the following criteria for DDR before completing the registration:

  • Dealership must be within Ontario
  • Dealership is registered with Ontario Motor Vehicle Industry Council

Sign up today to reserve your spot for the DDR webinar HERE

Final UCDA Response to Auditor General Report December 17

RESPONSE OF THE USED CAR DEALERS ASSOCIATION OF ONTARIO TO THE AUDITOR GENERAL’S VALUE-FOR-MONEY AUDIT OF THE ONTARIO MOTOR VEHICLE INDUSTRY COUNCIL

 

The Used Car Dealers Association of Ontario (“UCDA”) welcomes the opportunity to share its thoughts and comments on the Auditor General’s “Value for Money” Audit of the Ontario Motor Vehicle Industry Council (“OMVIC”).

 

Many of the issues raised in the report, and in the 30 recommendations, are not new ideas.  They have been considered over the years by the UCDA, OMVIC and other stakeholders.  In previous meetings and contacts with Ministry officials, the UCDA has discussed concerns with OMVIC efficiency, accounting, responsiveness, oversight and governance.  Other recommendations, it is fair to say, have never been considered, and we hope to explain why in this response. We have not included our past submissions to government on many of these issues, but would be pleased to share them with the Ministry should it find it helpful.

 

We have two fundamental concerns about the Auditor General’s report:

  1. In several instances, her recommendations range far beyond what we expected this value-for-money audit would entail, and instead venture into the realm of policy, rule making and politics.  In short, we think the Auditor General has exceeded her mandate. 

We do not believe the Auditor General has an appreciation of our industry, its history, or the creation and development of the regulatory regime under which it operates.  This a product both of an understandable lack of expertise in the subject-matter of her inquiries as well as a failure to adequately consult with persons or stakeholders that could have helped to better inform her of the industry, the issues it faces, the relationship with OMVIC and consumers and solutions to those issues that would enhance the industry and better protect consumers.

As an example, we note the following comments by the Auditor General, which exemplify our concern with her lack of insight:

 

“We also noted that OMVIC’s Board of Directors is heavily represented by motor vehicle dealers even though OMVIC is a consumer protection agency.”

 

This observation misses the point on at least two levels.   

First, OMVIC was created to administer a self-managed industry.  Dealers regulating dealers was the very point of OMVIC’s creation. Government felt, and we agreed, that the industry would be more proactive and knowledgeable in the regulation of its own industry than government ever was or could be, and this has proven to be true.  Moreover, no public monies other than transaction fees (which dealers may choose to pass on to consumers), sustains OMVIC’s operations. Funding is provided by the industry itself, a key element of the self-managed process that must be kept in mind.  It should also be noted that self-management works. We would ask the Ministry to consider that under the current regulatory model, OMVIC has been more proactive in its enforcement, prosecutions and inspections than was the case before OMVIC was established. It is clear that the professionalism of the industry, under the current makeup of the Board of Directors, has blossomed.  

Second, OMVIC is not ‘just’ a “consumer protection agency”, nor was it ever intended to be.  If it was, dealer-to-dealer sales would not be regulated, a point the Auditor General seems to have glossed over. While we acknowledge OMVIC’s role in the protection of consumers in  transactions involving the purchase or lease of motor vehicles, it was not the only intention when OMVIC was established. Our knowledge of the government’s intention when it created OMVIC stems directly from our participation in the process leading to the establishment of OMVIC and in the development of the regulatory regime that followed in 2010. In our view, it should not be classified as a consumer protection agency. Other legislation exists that primarily focuses on consumer protection. UCDA believes that OMVIC should be considered a ‘professional regulator,’ not an enforcement arm for any special interest group.

As we prepared our submission, we were cognizant of the principles of professional regulation outlined in a report submitted in April 2019 to the Professional Engineers of Ontario by Harry Cayton, an advisor to the United Kingdom-based Professional Standards Authority. We agree with the following principles outlined in that report – entitled “A review of the regulatory performance of Professional Engineers of Ontario”:

  • Good professional regulation is found in powers, policies, and practices that seek to deliver regulatory objectives in a manner that does not impose unnecessary burdens, that supports innovation and promotes productivity, and allows services and professional practice to flourish
  • Good regulation reflects prevailing good practice and remains relevant. In contrast, poorly designed and delivered regulation does not serve or protect the public interest. Rather it imposes unnecessary costs on society, practitioners and the public without any meaningful benefit
  • Transparency: Regulators must be open, and keep regulations and regulatory processes simple and user friendly
  • Accountability: Regulators must be able to justify decisions, and be open to public scrutiny
  • There is a public interest in all regulators carrying out their duties in an efficient and effective manner, and seeking to avoid inconsistency, disproportionality, and a lack of transparency and accountability.

 

We believe that in order to be an effective regulator, OMVIC should adhere to these common principles, much like other self-regulating professions, such as the legal, medical, dental professions and others.

In our view, many of the Auditor General’s recommendations would lead to more red tape, more regulations and more legislation that would hinder, not help, the industry and the consumers it serves.  We believe that OMVIC currently has the mandate and the legislative and regulatory authority to operate in accordance with the principles outlined above. What OMVIC requires is better oversight and guidance in order to improve how it fulfills its mandate.

 

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RECOMMENDATION 1 To confirm that applicants seeking to register as motor vehicle dealers can be expected to be financially responsible in the conduct of their business, as required by the Motor Vehicle Dealers Act, 2002, we recommend that the Ontario Motor Vehicle Industry Council (OMVIC):

  • implement a revised registration application review process, which includes assessing whether motor vehicle dealers have adequate start-up funding to operate their business; and
  • train its registration staff on its future updated application review process so that it is consistently applied by all registration staff when reviewing new motor vehicle dealer applications.

 

UCDA:  we are generally in agreement with the recommendation, with these provisos:

  • We are unaware of who at OMVIC has the specialized expertise and knowledge required to analyze the financial requirements that applicants for registration must have in order to meet financial responsibilities of a new dealer. In our view, a knowledgeable third party should be retained to assess what the start-up costs might be for each class of registrant.
  • The specific financial requirements must be reduced to writing in clear and concise language, so that there is no ambiguity as to the financial expectations expected of new registrants.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation about the need to review the application process and develop guidelines to fully assess the new dealer applicants’ financial strength to ensure they have sufficient funds to operate their business. OMVIC will require new dealer applicants to provide a business plan regardless of their dealer class. The business plan includes their start-up capital, all expected expenditures such as lease or mortgage payments for their place of business, advertising costs, insurance for vehicles, salaries of employees, and repair recondition costs for used vehicles.

 

The new dealer application procedure will be updated based on the Auditor General’s recommendation. The process may differ for each dealer class due to capital requirements and operational expenses. OMVIC will use this information to determine whether a new dealer applicant has sufficient funding to start a motor vehicle dealer business. OMVIC will also ensure that staff are trained on these added guidelines, with a view to applying them in a consistent manner when reviewing new dealer applications

 

RECOMMENDATION 2 To enhance consumer protection, and increase recoveries to the Compensation Fund, we recommend that the Ontario Motor Vehicle Industry Council:

  • update its registration policies to require a letter of credit from every motor vehicle dealer at the time of registration; and

• extend the time frame that it holds a letter of credit past the closure of the dealership.

UCDA:

 

The letter of credit process does not work. A more detailed review of the issue by the Auditor General would have demonstrated that letters of credit have not solved any of the problems that she imagines exist. What the Auditor General appears to be referring to is really the same as a bond, and that was replaced years ago by the Compensation Fund.  We believe if the amounts that have actually been collected out of OMVIC mandated letters of credit were reviewed, one would find that they are negligible. Further, if the objective of the letter of credit is to protect the Compensation Fund from having to pay out claims, we would invite a proper analysis of paid claims to determine what proportion of claims have resulted from the actions of new dealer registrants who may have been required to post a letter of credit, compared with claims made against more established dealers who would not have been required to do so.

 

Letters of credit pose real hardships to new businesses, tying up much needed capital at a crucial stage of development, and represents more needless red tape.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding the requirement for increased use of letters of credit. Accordingly, OMVIC, in consultation with the Compensation Fund’s Board of Trustees, will review and amend the current letters of credit policy as required. The revised policy would apply to motor vehicle dealers (new applicants) whose dealer class permits them to interact with consumers. OMVIC, in consultation with the Compensation Fund’s Board of Trustees, will review and consider the appropriate time frame required to maintain a letter of credit with OMVIC.

RECOMMENDATION 3 To enforce consumer protection in the motor vehicle industry, and to ensure that motor vehicle dealers and salespersons are up to date on changes to the Motor Vehicle Dealers Act, 2002, we recommend that the Ministry of Government and Consumer Services introduce mandatory continuing education requirements for motor vehicle dealers and salespersons.

UCDA

 

We support this in principle. Of course, the devil is in the details, i.e. what material is taught, will testing be implemented and what happens if a registrant fails, what are the costs and how will the courses be delivered. We could support the notion that all registrants should be required to attend mandatory education sessions; however, we do not believe that testing is required. Given UCDA’s current involvement in dealer education, we believe that we should be consulted in course development and implementation.

 

Any discussion about mandating and developing continuing education will require extensive consultation with stakeholders and educators and will require legislative changes.

 

OMVIC RESPONSE OMVIC agrees and supports the Auditor General’s recommendation. OMVIC welcomes the opportunity to collaborate with the Ministry of Government and Consumer Services to develop options for the government’s consideration relating to mandatory completion of continuing education for all registrants.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services will collaborate with the Ontario Motor Vehicle Industry Council (OMVIC) to develop options related to mandatory completion of continuing education for all registrants, and undertake appropriate consultations in respect of those options. This recommendation would require developing potential regulatory proposals for the government’s consideration. Should the government choose to move forward with this recommendation, changes would be implemented accordingly

RECOMMENDATION 4 So that the Ontario Motor Vehicle Industry Council (OMVIC) can meet its target to process applications for new motor vehicle dealer registrations in a timely manner, we recommend that OMVIC:

 

  • work with motor vehicle stakeholder groups to review and revise its application and application process so that it is clear to applicants what specific supporting documents they are required to provide with their application;
  • perform a cost-benefit analysis of implementing an electronic version of the application process with built-in controls to prevent incomplete applications from being submitted; and
  • after completing these steps, perform a workload study to determine appropriate staffing levels to process applications within its targeted time frame.

 

UCDA supports this recommendation. Some applications that have been brought to our attention have taken many months to approve or reject. We believe that decisions on whether to approve an application for registration or propose to refuse can and should be made within no more than two or three weeks in almost all circumstances.  We would be pleased to share our previous submissions to the Ministry in respect of this issue.   

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation and will leverage relationships with stakeholder groups to solicit their feedback in respect to a revision of the application for new registrants to simplify and clarify the process, including clarifying the specific supporting documents that are required to be provided. This will include engagement with the Used Car Dealers Association of Ontario (UCDA) and Trillium Automobile Dealers Association (TADA). In addition, OMVIC is developing a new system that will include built-in controls to prevent incomplete applications from being submitted. The system is scheduled to be launched by early 2022. OMVIC believes that the implementation of its new system will result in greater efficiency in the processing of applications while decreasing the follow-ups required for incomplete applications. Upon implementation of the new system, OMVIC will conduct a workload study to determine appropriate staffing levels to ensure the processing of applications within the targeted time frame.

 

  • develop a risk framework (for example, high, medium and low) and assign an inspection frequency to each level of risk
  • determine and assign a risk level and inspection frequency to each motor vehicle dealer;
  • put in place systems to ensure that each dealer is scheduled for and receives an inspection based on its assigned risk level;
  • put in place systems to reassess each dealer’s risk level on an ongoing basis;
  • perform a cost-benefit analysis on implementing an information system that can continually assess the risk of each dealer and assign an appropriate inspection frequency based on the dealer’s risk level; and
  • assess the workload of inspectors and ensure that OMVIC has sufficient staff to carry out and complete annually assigned inspections on a timely basis.

 

UCDA supports this recommendation and OMVIC’s response to it.

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding the need to inspect dealers based on their risk of non-compliance. OMVIC is developing a new risk assessment methodology that will see dealers assigned a risk level of low, medium or high. Under this new methodology, low-risk dealers will be inspected once every four to five years, while high-risk dealers will be inspected every one to two years. The new methodology will include criteria to determine/assess the level of risk. The risk assessment methodology, inspection frequency and scheduling functionalities will be built into OMVIC’s new system. The new system will also reassess each dealer’s risk level on an ongoing basis. Inspectors will access this information to schedule their inspections, and management will monitor to ensure inspections are taking place on time. Appropriate controls will be developed and included in new operational policies and/ or procedures. OMVIC is currently reviewing the workload of the inspection team, and will continue to do so, in light of the Auditor General’s recommendation. Preliminary findings suggest the need for an additional manager and additional inspectors. Further workload analysis will be undertaken to determine where, in addition to the Niagara Region, additional inspectors may be required. The addition of a second inspections manager will increase the level of accountability and oversight of front-line inspections staff, which is specifically intended to help address the types of concerns identified during the audit.

RECOMMENDATION 6 So that the Ontario Motor Vehicle Industry Council’s (OMVIC’s) inspectors carry out inspections of motor vehicle dealers consistently and effectively, we recommend that OMVIC:

  • develop and implement an inspection oversight process that includes an inspection file review and documented assessment of whether inspections are carried out effectively and consistently;
  • where inconsistencies are identified, take steps to facilitate corrective action; and
  • periodically rotate inspectors in geographic areas when it is feasible to do so.

 

UCDA supports this recommendation and OMVIC’s response to it.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding the need to carry out dealer inspections in an effective, efficient and consistent manner. In the fall of 2020, OMVIC conducted a comprehensive review of the current inspection process and identified a series of issues that needed to be addressed, including inspection scope, frequency/volume of inspections, lack of consistency, lack of oversight/review processes, and the need for operational policies and/ or procedures.

 

Early in 2021, OMVIC initiated a process to address these issues through the formation of various project teams intended to raise the overall quality and consistency of our inspections through the development of new policies and/or procedures. Included in this work is the development of a quality assurance process, including increased management review and possibly peer review processes. OMVIC’s intention is to develop better controls to achieve a more consistent outcome and hire an additional manager to help oversee this geographically dispersed team. OMVIC will undertake to rotate inspectors in geographic areas (such as the Greater Toronto Area) where it is feasible to do so.

RECOMMENDATION 7 So that violations of the Motor Vehicle Dealers Act, 2002 and the relevant sections of the Consumer Protection Act, 2002 are corrected by motor vehicle dealers on a timely basis, we recommend that the Ontario Motor Vehicle Industry Council:

  • develop and implement a framework with appropriate time frames that provides guidance to inspectors on the types of violations of the acts that should be reviewed with a follow-up inspection; and
  • ensure that follow-up inspections are performed in accordance with this framework.

 

UCDA supports this recommendation and OMVIC’s response to it.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding the importance of follow-up inspections of dealers when non-compliance is detected. In July 2021, OMVIC put in place a Dealer Support Team that is intended to be the point of contact for dealers when they have compliance related inquiries. The team will work closely with OMVIC’s Inspections Team to address non-compliance issues from an advisory/collaborative approach. OMVIC is also in the process of establishing a new Policy Team, which will be responsible for developing compliance-related guidance documents and tools to better support the dealer community in achieving compliance. This team will work closely with the Inspections and Dealer Support teams by conducting research and analysis, developing new compliance-related tools, and providing compliance-related advice and guidance. OMVIC will develop a new process, supported by appropriate policies and/or procedures, to set out how inspection follow-ups will take place. This new process will set out the circumstances or conditions when a follow-up inspection will occur, or whether it is more appropriate to refer the matter to the Dealer Support Team for outreach, advice or guidance. This new process will help inspectors understand the circumstances when their follow-up is required, or whether it is more appropriate for the Dealer Support Team to take up the matter. In addition, controls will be put in place to ensure that follow-up inspections are performed in accordance with this new process to facilitate a more consistent inspections outcome

RECOMMENDATION 8 To improve motor vehicle dealer compliance with the all-in-price advertising requirement, we recommend that the Ontario Motor Vehicle Industry Council utilize information gathered by consumer associations to take appropriate enforcement action against motor vehicle dealers that do not comply with the Motor Vehicle Dealers Act, 2002.

 

UCDA wonders if this recommendation might lead people to question the role of consumer groups in MVDA enforcement, as their agenda is often commercial in nature, and not entirely altruistic. We agree with OMVIC’s response to the recommendation and would encourage OMVIC, in consultation with both dealer and consumer stakeholders, to perform its own information gathering and, where appropriate, undertake enforcement actions based on the information gathered, in accordance with the legal principles to which such investigations would be subject.

 

OMVIC RESPONSE OMVIC understands the Auditor General’s recommendation regarding the use of information gathered by consumer associations. OMVIC will be ceasing its practice of utilizing consumer associations to conduct mystery shopping of dealers for all-in-pricing advertising. Instead, OMVIC will reallocate funding to its Enforcement Team to hire additional staff who will be dedicated to the mystery shopping program. OMVIC also plans to expand the mystery shopping program to cover more dealerships on an annual basis.

RECOMMENDATION 9 So that investigations of registered and unregistered motor vehicle dealers and salespersons are completed effectively and on a timely basis, and that appropriate enforcement action is taken where justified, we recommend that the Ontario Motor Vehicle Industry Council:

  • establish reasonable guidelines or benchmarks for enforcement action and the timely completion of investigations;
  • monitor investigations against these guidelines or benchmarks to identify and follow up where significant differences are found;
  • establish a process to periodically review investigation files to determine if they are complete and result in appropriate enforcement action, and to take corrective action where necessary; and
  • develop policies and procedures on key aspects of investigations to help guide the work of its investigators.

 

UCDA supports this recommendation and agrees with OMVIC’s response.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding the need for investigations to be carried out in an effective, efficient and timely manner. OMVIC launched a new initiative to develop operational policies and procedures for the Investigations Team. By the end of 2021, OMVIC will have in place policies and procedures to cover topics such as initiation and closure of investigations, prioritization of investigations, multijurisdictional investigations and related charges, and search warrants. In addition, functionality will be built into OMVIC’s new system to better manage open investigations through regular reporting. The goal is to have a comprehensive set of controls to guide our investigations, and cover such topics as timeliness, review and processes to facilitate corrective action. OMVIC is also working on an initiative to improve the overall quality of the Investigation Teams’ court briefs.

RECOMMENDATION 10 To provide consumer protection, and strengthen the Ontario Motor Vehicle Industry Council’s (OMVIC’s) effectiveness in both mediating and resolving disputes between consumers and motor vehicle dealers, we recommend that OMVIC:

  • record in its systems its assessment of whether a motor vehicle dealer has breached one or more provisions of the Motor Vehicle Dealers Act, 2002 or the Consumer Protection Act, 2002 for each complaint it reviews; and
  • work with the Ministry of Government and Consumer Services to reassess the current limitations of the Motor Vehicle Dealers Act, 2002 that prevent OMVIC from compelling motor vehicle dealers to provide restitution to consumers when they have breached the law.

 

UCDA supports the first recommendation.

 

However, we do not support the Auditor General’s recommendation that OMVIC should be given legislative authority to compel dealers to provide restitution to consumers and we are surprised that OMVIC agrees with the recommendation:

  1. Providing this authority to OMVIC would require the creation of an adjudicative process that currently does not exist, a process that will be costly to establish and maintain.
  2. Molding OMVIC into an adjudicator will compromise its current role because of a possible appearance of bias and may lead dealers to question the fairness of the process. It will also add to dealer costs, as they will undoubtedly require legal counsel for proceedings that are commenced pursuant to this recommendation.  Consumers with access to a process that will not impose any expense on their part will not hesitate to pursue even the most frivolous claims as they will bear no consequences if their claims are unsuccessful. In order to discourage frivolous claims, therefore, OMVIC would have to be given the power to award costs.
  3. We also question OMVIC’s level of expertise in assuming the role of adjudicator. As the Ministry suggests in its response, this would be a significant change from the accepted role of a regulator, transforming it from a regulatory and enforcement agency into an adjudicator of civil disputes.  In essence, OMVIC would become a court of law, subject to rules of civil procedure and natural justice, just as civil courts are. It follows that a meaningful route of appeal would also have to exist. An OMVIC civil adjudication process would by its very nature become costly and complicated, as registrants would be entitled to legal representation to challenge any
  4. civil restitution orders made by OMVIC. OMVIC’s response to this recommendation is overly simplistic and ignores the significant ramifications of any such changes.
  5. Finally, the Compensation Fund process provides a remedy for consumers; this recommendation is not needed.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. OMVIC will develop a method to record in its systems an initial assessment of any potential compliance issues for each complaint that is escalated and forwarded for review. OMVIC will conduct a review of the Motor Vehicle Dealers Act, 2002 to identify what amendments can be made to the legislation that would compel motor vehicle dealers to provide restitution to consumers upon a breach of the act. Proposed amendments will be submitted to the Ministry of Government and Consumer Services for consideration.

 

MINISTRY RESPONSE Providing a regulator, such as the Ontario Motor Vehicle Industry Council (OMVIC), with the ability to compel registrants to provide restitution to consumers would represent a significant change from its current role. It would require OMVIC to become an adjudicator of civil disputes. This recommendation would require developing potential legislative and regulatory proposals for the government’s consideration, which would involve consultations with the public and motor vehicle sector to assess impacts, costs and timing. The Ministry of Government and Consumer Services will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 11 To improve motor vehicle dealer compliance with the requirements of the Motor Vehicle Dealers Act, 2002, and to ensure that complaints that warrant enforcement action against motor vehicle dealers are consistently escalated for enforcement action, we recommend that the Ontario Motor Vehicle Industry Council (OMVIC):

  • create a clear and specific framework and criteria to be used to determine when a complaint involving a motor vehicle dealer is to be referred for enforcement action; and
  • train all complaint handling staff to consistently and accurately apply this framework and criteria to all complaints received and mediated by OMVIC.

 

UCDA supports this recommendation. OMVIC’s handling of complaints has been inconsistent at both the consumer and dealer levels.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. In early 2021, the Consumer Support management team, which handles complaints, recognized that this was an area of weakness and began reviewing the way in which Consumer Support Team members referred files for administrative review. Management is working with team members to create a framework and criteria for referring files for further review. This is an ongoing process that forms a portion of both management’s and the team’s annual performance goals, and is expected to be completed in the coming months. In developing the framework, the Consumer Support Team will consider criteria such as the nature of the complaint, any documentation or other evidence in support of the complaint, any possible contraventions of all applicable legislation, as well as the complaint and enforcement history of the dealership. OMVIC’s Consumer Support Team will be directly involved in the development of the framework, which will enhance their understanding of what is expected of them when deciding whether to refer a complaint file for further review. In addition to this, once the framework is completed the team will meet to review the implementation plan. Team management will provide team members with materials such as guidelines for file referrals. Management will also perform internal reviews to ensure the criteria and framework are being applied appropriately and consistently.

 

  • conduct a workload study for its complaint handling staff; and
  • use the results of this study to ensure that OMVIC’s consumer support team is sufficiently staffed.

 

UCDA supports this recommendation.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. OMVIC’s Consumer Support Team, which is responsible for handling complaints, will review the current workload for all its team members. Currently there is no manager for the department that handles complaints; OMVIC will consider putting a manager in place to increase efficiency, effectiveness and accountability. It is expected that additional front-line staff will be required. The workload review will examine the work completed by the different team members along with the increased complexity of the work to determine how many staff members may be required to support the work of the Consumer Support Team in order to implement the Auditor General’s recommendations.

RECOMMENDATION 13 To protect consumers who purchase a motor vehicle from a registered motor vehicle dealer that does not meet all its obligations under the Motor Vehicle Dealers Act, 2002 or relevant sections of the Consumer Protection Act, 2002, we recommend that the Ontario Motor Vehicle Industry Council (OMVIC) work with the Compensation Fund’s Board of Trustees to:

  • review consumer complaints that were not eligible for a claim against the Compensation Fund to develop additional eligibility criteria; and
  • propose to the Ministry of Government and Consumer Services to include in the Motor Vehicle Dealers Act, 2002 additional criteria for eligibility for compensation, and to also allow the Compensation Fund’s Board of Trustees to use their discretion to compensate consumers for claims involving the violation of the acts that do not fit into a specific eligibility criterion.

 

The UCDA’s position is that the categories for Compensation Fund claims are already broad enough, and indeed, we have previously raised concerns with OMVIC about its propensity to apply the rules too broadly. To give Trustees the kind of broad discretion proposed here is extremely arbitrary. Like OMVIC itself, the Fund is not an adjudicatory body, and if it is to be made such a body, capable of making legal determinations of fact and law, registrants who are the subject of a claim made to the Fund, must be given the opportunity to provide a response to the claim, thus adding cost and time to the process. We would be pleased to provide the Ministry with some examples of the concerns we have raised with OMVIC and the Compensation Fund on this issue previously.  

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. OMVIC will review the consumer complaints that were identified as ineligible for compensation and will consider whether additional eligibility criteria are required, in consultation with the Compensation Fund’s Board of Trustees. Upon completion of the review, OMVIC, in consultation with the Ministry of Government and Consumer Services, will assess additional criteria for eligibility for compensation, including a discretionary provision to ensure more complete eligibility.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) will collaborate with the Ontario Motor Vehicle Industry Council (OMVIC) to develop options for expanding eligibility under the Motor Vehicle Dealers Compensation Fund (the Fund). This recommendation would require developing potential regulatory proposals for the government’s consideration, which would involve consultations with the public and the motor vehicle sector to assess impacts. The Ministry will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 14 To protect consumers who purchase a motor vehicle from an illegal motor vehicle dealer, we recommend that the Ontario Motor Vehicle Industry Council (OMVIC) work with the Compensation Fund’s Board of Trustees and the Ministry of Government and Consumer Services to allow these consumers to make a claim to the Compensation Fund where OMVIC’s own investigation confirms that consumers were intentionally misled by an illegal motor vehicle dealer.

 

The UCDA finds this proposal unworkable for many reasons.  The Fund is entirely financed by levies paid by registered dealers. It is a fundamental aspect of the Fund’s very existence that it should provide compensation where appropriate to consumers who have purchased from a registered dealer and have a legitimate claim that such a dealer either will not, or cannot, honour. The Fund was never intended to benefit consumers who do not buy from registered dealers; nor should it. It has been the benchmark that distinguished dealers from illegal curbside sellers.  Take that away and you take away a major reason to obtain a dealer registration in the first place.  Consumers who choose to purchase from private sellers do so at their own risk – and they should understand that the protection offered by the Fund comes from purchasing vehicles from registered dealers. Moreover, the costs that would be added to the Fund would increase to the point that dealer contributions would skyrocket.  Finally, compensation for the actions of illegal sellers was never the purpose for which the Fund was designed.  No other compensation fund in Canada that we are aware of, from the Law Society of Ontario, to the real estate or travel industries funds, compensates consumers in this manner.

 

OMVIC RESPONSE OMVIC appreciates the Auditor General’s recommendation. OMVIC will work with the Compensation Fund’s Board of Trustees and the Ministry of Government and Consumer Services to consider and review the implications of such a change to the operation of the Compensation Fund, to OMVIC, to registrants and to consumers in Ontario. As legislative and regulatory changes are required, OMVIC will support the Ministry of Government and Consumer Services as it develops options for the government’s consideration.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) will collaborate with the Ontario Motor Vehicle Industry Council (OMVIC) to develop options for expanding eligibility under the Motor Vehicle Dealers Compensation Fund (the Fund). This recommendation would require developing potential legislative and regulatory proposals for the government’s consideration, which would involve consultations with the public and the motor vehicle sector, including current registrants, to assess impacts. The Ministry will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 15 So that prospective motor vehicle buyers are aware of the Ontario Motor Vehicle Industry Council’s (OMVIC’s) role and the services it provides to protect consumers, we recommend that OMVIC work with the Ministry of Government and Consumer Services to:

  • develop an information package for vehicle purchasers that outlines OMVIC’s role and consumer protections available to them which can be distributed to motor vehicle dealers;
  • require motor vehicle dealers to provide vehicle purchasers with the information package at the time of purchasing a vehicle; and
  • develop, implement and monitor the success of a marketing plan to increase consumer awareness about consumer protection rights in place under the Motor Vehicle Dealers Act, 2002 and the Consumer Protection Act, 2002, as well as OMVIC’s role and its services available to the public.

 

The UCDA observes that this idea, through full disclosure made by registered dealers pursuant to the MVDA, already occurs in sales and lease transactions in Ontario. The Used Vehicle Information Package, which is frankly of questionable value for private buyers, was mandated in the early 1990s to enable consumers to have at least some helpful information and knowledge when purchasing privately, because they were otherwise unprotected. That is not the case for consumers purchasing from registered dealers.

 

OMVIC RESPONSE OMVIC accepts this recommendation and will work with the Ministry of Government and Consumer Services to propose regulatory changes for the government’s consideration to require an information package to be provided to consumers by motor vehicle dealers. In collaboration with its contracted marketing agency, OMVIC launched a new campaign in September 2021 that utilizes a fresh and more targeted approach to engaging consumers across new media. In addition, as of July 2021, OMVIC has been working on the development of a marketing plan that will complement OMVIC’s annual

consumer awareness campaigns. It includes new strategies to guide the efforts of OMVIC employees to enhance awareness of car-buying rights that are still not generally known, as well as OMVIC’s role and its services available to the public. The marketing plan will include a focus on identified high-risk issues for consumers and areas of high non-compliance among dealers. It will also include key performance indicators to track and trend our progress toward our marketing objectives.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees that consumer awareness is important and that prospective consumers of motor vehicles would benefit from more information about the Ontario Motor Vehicle Industry Council (OMVIC) and the protections for consumers under the Motor Vehicle Dealers Act, 2002. The Ministry will collaborate with OMVIC as it develops an information package for motor vehicle purchasers. The Ministry will develop options for requiring dealers to provide the information package to consumers. This recommendation would require developing potential legislative or regulatory proposals for the government’s consideration, which would involve consultations with the public and the motor vehicle sector to assess impacts. Should the government choose to move forward with this recommendation, changes would be implemented accordingly

 RECOMMENDATION 16 So that consumers in Ontario have a reasonable amount of time to reflect on their vehicle purchase or lease, and be able to cancel their vehicle transaction agreement without penalty, we recommend that the Ministry of Government and Consumer Services make regulatory changes to put in place a cooling-off period for all vehicle transactions in Ontario, citing best-practice consumer protections in place in other Canadian provinces.

 

The UCDA opposes this recommendation. The notion of cooling off periods has been considered and discarded time and time again over the years.  The idea is not new, but it also does not work.  Aside from the very real commercial chaos this would cause, it will only serve to further confuse consumers who should be entering into a contract for a vehicle like they would for any expensive item. That is, they should not enter into a contract unless they truly want to purchase the vehicle. The reason the Ministry wanted SALES FINAL in large bold font on all bills of sale and lease agreements was to alert the buyer to the serious nature of the contract they were entering into.  Just as when one buys a house, or any big-ticket item, dealers often ask for and take deposits to secure a buyer’s commitment for the same reason. Once again, should this notion see the light of day, the very purpose of entering into a written and signed contract would seem quaint.

 

In an era where remote online sales are becoming more common, we do understand that consumers would be better protected if they had some kind of cancellation or refund policy. However, we feel that the marketplace has already provided that remedy in that most “on-line” dealers offer such a policy, sometimes for a period of up to 7 days. As more dealers and consumers engage in this type of transaction, it will be a necessity for dealers to offer something similar in order to attract customers in a highly competitive marketplace. We believe it is the marketplace that should be allowed to govern here.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. OMVIC agrees to work with the Ministry of Government and Consumer Services as required on options for the government’s consideration to implement a cooling-off period for all vehicle transactions in Ontario between consumers and dealers.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) will review best practices in other jurisdictions and develop options for the government’s consideration. This recommendation would require developing potential legislative or regulatory proposals, which would involve consultations with the public and motor vehicle sector to assess impacts. The Ministry will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. 

Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 17 So that consumers potentially receive a more competitive interest rate based on their credit score, we recommend that the Ontario Motor Vehicle Industry Council (OMVIC):

  • take steps to increase public and consumer awareness regarding dealer responsibilities and consumer risks with regard to interest rates;
  • include a step in its compliance inspections to verify whether motor vehicle dealers are disclosing to the consumer all the financing offers received; and
  • propose regulatory changes to the Ministry of Government and Consumer Services that would require motor vehicle dealers to disclose to consumers all the financing options the dealer has received in response to the consumer’s credit application.

 

The UCDA questions the prudence and practicality of this recommendation. There is more to financing than the applicable interest rate, though it usually receives the most attention from consumers and dealers alike. Other provisions, such as the term of the agreement, the amount of any down payment, whether payments are monthly, bi-weekly or even weekly, etc. are also issues to be considered when purchasing a vehicle. Dealers, when they also act as the lender, already provide full cost of credit disclosure to purchasers and lessees as required by the Consumer Protection Act. When third parties, like banks, are the lender, they meet those written disclosure obligations as well. Any further obligations over and above this, that would single out dealers for special further obligations, should involve consultation with industry and consumer stakeholders.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation and will ensure that this issue is incorporated in the annual marketing plan on an ongoing basis to ensure an increased awareness of dealer responsibilities and consumer risks regarding interest rates. The marketing plan will include key performance indicators to track and trend our progress toward marketing objectives. OMVIC will prepare a submission for proposed regulatory changes for consideration by the Ministry of Government and Consumer Services that will require dealers to disclose to consumers all the financing options received by the dealer for the consumer. If regulatory changes are implemented that require dealers to disclose all financing options to consumers, OMVIC would incorporate a new step into its inspection process to verify dealer disclosure of all financing offers. In addition, the Dealer Support Team would work with the Communications Team to expand efforts to better educate consumers about vehicle financing.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees that consumers of motor vehicles would benefit from greater awareness of the financing options available when buying or leasing a motor vehicle. The Ministry will collaborate with the Ontario Motor Vehicle Industry Council (OMVIC) to develop options to require motor vehicle dealers to disclose to consumers all the financing options the dealer has received in response to the consumer’s credit application. This recommendation would require developing potential regulatory proposals for the government’s consideration, which would involve consultations with the public and the motor vehicle sector to assess impacts. The Ministry will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 18 So that motor vehicle dealers comply with the requirements of the Motor Vehicle Dealers Act, 2002 to include all the fees and charges in the advertised price of a vehicle, we recommend that the Ontario Motor Vehicle Industry Council:

  • take progressive enforcement action against motor vehicle dealers who do not comply with the requirement; and
  • increase its efforts to educate consumers about the all-in-price advertising requirement in Ontario

 

UCDA supports this recommendation.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation and supports the need for progressive enforcement action in relation to all in-price advertising. OMVIC’s plan is to expand the mystery shopping program to cover more dealerships on an annual basis. OMVIC will take appropriate/progressive enforcement action when non-compliance is observed and will send “pass” letters when dealers are found to be compliant. OMVIC will consider the feasibility of implementing a new process to identify dealers for inclusion in the mystery shopping program through the complaints process. OMVIC will review the scope of its dealer inspection program and incorporate a new step to examine all-in-price advertising. OMVIC will also develop better educational supports for dealers about all-in-pricing advertising requirements. Educating consumers about the all-in-price advertising requirement will also be incorporated into OMVIC’s annual marketing plan on an ongoing basis to enhance our existing efforts. The marketing plan will include key performance indicators to track and trend our progress toward our marketing objectives.

RECOMMENDATION 19 To improve the effectiveness of the Ontario Motor Vehicle Industry Council’s (OMVIC’s) operations in order to provide better protection to consumers and increase OMVIC’s responsiveness in processing dealer registrations and taking enforcement action, we recommend that OMVIC:

  • review the workload of its key operating departments; and
  • put in place a plan to improve operations in the areas of consumer protection and responsiveness to consumers and dealer registrations and enforcement action.

 

UCDA supports this recommendation.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation regarding improvements to its consumer protection operations in the areas of enforcement, consumer support and registration. OMVIC will complete a workload study in 2022 for the Inspection Team. OMVIC will also undertake workload studies of the Registration Department and the Consumer Support Department, which handles complaints, to determine the optimum staffing levels for these departments to address dealer registration and consumer complaints in a timely manner. OMVIC will also develop a strategy to increase the effectiveness and efficiency of its enforcement, consumer support and registration departments. The strategy will include the development of operational policies and procedures, new functionality in OMVIC’s new information system to better manage workflow, increased oversight and accountability mechanisms, improved reporting structures, and additional training for front-line staff. Overall, the aim of the strategy will be to develop better controls to achieve a more consist[1]ent outcome from the operational teams. These measures are intended to address the types of concerns identified during this audit and improve OMVIC’s ability to protect consumers.

RECOMMENDATION 20 So that the Ontario Motor Vehicle Industry Council (OMVIC) can contribute directly to the Compensation Fund (Fund) to cover future consumer claims, if needed, we recommend that OMVIC, in co-ordination with the Compensation Fund’s Board of Trustees:

  • work with the Ministry of Government and Consumer Services to propose an update to the government on regulations under the Motor Vehicle Dealers Act, 2002 that would permit OMVIC to transfer funding from its general surplus to the Fund; and
  • establish a policy to periodically review the continuing financial sufficiency of the Fund.

 

The UCDA does not agree with this proposal. The Compensation Fund is funded directly by dealers as per the MVDA. This arrangement has worked well for more than 35 years. There are provisions in the Act that allow for levies to be collected from dealers should the Fund fall below a prescribed amount.  This has never been necessary and currently the Fund is nowhere near this threshold. However, if it were, registered dealers would absolutely ensure that the Fund was topped up.  Monies held by OMVIC should be used to fulfill its mandate as regulator; i.e. education, registration, mediation and enforcement and should not be linked to providing money for the Fund.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. In collaboration with the Compensation Fund’s Board of Trustees, OMVIC agrees to review the existing regulations and will develop a regulatory change proposal for consideration by the Ministry of Government and Consumer Services to permit OMVIC to transfer funding from its general surplus to the Compensation Fund. Further, OMVIC will work with the Compensation Fund’s Board of Trustees and the OMVIC Board of Directors to develop a policy to engage actuarial services every three years (or as needed), to ensure the continuing financial sustainability of the Compensation Fund.

 

MINISTRY RESPONSE The administrative authority model is based on the principle of cost recovery, and issues respecting fiscal surpluses must be carefully considered within this context. The Ministry of Government and Consumer Services (Ministry) will need to assess the feasibility of an option allowing the Ontario Motor Vehicle Industry Council (OMVIC) to transfer surplus funds to the Motor Vehicle Dealers Compensation Fund (Fund). The assessment will include compliance with the funding principles applicable to OMVIC and the Fund. Based on this assessment, the Ministry may need to develop potential legislative and regulatory amendments for the government’s consideration, which would involve consultations with the public and the motor vehicle sector to assess impacts. The Ministry will develop proposals for the government’s consideration, which will be informed by the Auditor General’s recommendations. The Ministry will also work with OMVIC to update the administrative agreement between the Minister and OMVIC. Through the agreement, the Ministry would establish a future requirement for OMVIC to implement a policy to conduct actuarial studies at regular time intervals, and to share the results with the Ministry.

RECOMMENDATION 21 To confirm that motor vehicle dealers remit complete fees for each motor vehicle transaction to the Ontario Motor Vehicle Industry Council (OMVIC), and that OMVIC collects those complete fees, we recommend that OMVIC:

  • work with the Ministry of Government and Consumer Services to put in place an information-sharing agreement with the Ministry of Transportation (MTO) to obtain motor vehicle registration records;
  • use the data obtained from MTO to verify the accuracy of vehicle transactions reported by individual motor vehicle dealers;
  • include a step in its motor vehicle dealer inspection process to compare the number of vehicle transactions self-reported by a dealer to the dealer’s financial records; and
  • take steps to collect unpaid fees from motor vehicle dealers found to have underreported vehicle transactions.

 

UCDA would support the elimination of the transaction fee.  Consumers were never meant to fund OMVIC and should not be doing so in our view. UCDA disagreed with the idea of transaction fees being passed along to purchasers of motor vehicles and we continue to believe that such fees should not be borne by consumers when they purchase vehicles.

Having said that we understand why dealers would wish to do so and are not suggesting that the practice should be prohibited. The better solution is to eliminate the fee.

 

OMVIC has the resources to ensure that dealers remit accurate fees for each motor vehicle transaction. It can easily conduct the necessary audits to determine if dealers are remitting the requisite fees to OMVIC.  We would be surprised if OMVIC is not currently conducting periodic audits, and we support it if in fact it is.  

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation. OMVIC will work with the Ministry of Government and Consumer Services to facilitate the development and execution of an information-sharing agreement with the Ministry of Transportation in order to obtain motor vehicle records related to dealer transactions If an information-sharing agreement with MTO is developed, OMVIC will create a plan to ensure the accuracy of vehicle transactions reported by individual motor vehicle dealers. OMVIC will review the scope of its dealer inspection program and incorporate a new step to compare the number of vehicle transactions self-reported by a dealer to the dealer’s financial records. OMVIC will also take steps to collect unpaid fees from motor vehicle dealers that have underreported vehicle transactions.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services welcomes the opportunity to facilitate a dialogue on a potential information-sharing agreement between the Ministry of Transportation and the Ontario Motor Vehicle Industry Council. MINISTRY OF TRANSPORTATION RESPONSE The Ministry of Transportation will work collaboratively with the Ministry of Government and Consumer Services and the Ontario Motor Vehicle Industry Council to explore a potential data sharing agreement.

RECOMMENDATION 22 To identify and reduce the risk of money laundering activity through motor vehicle dealers, we recommend that the Ontario Motor Vehicle Industry Council and the Ministry of Government and Consumer Services work with their counterparts in the federal government to introduce a requirement for motor vehicle dealers to report cash transactions over a certain threshold to the Financial Transactions and Reports Analysis Centre of Canada.

 

This proposal is a solution looking for a problem.  The UCDA has heard concerns about money laundering in the motor vehicle sales industry for years, and yet no one has offered a single example of an Ontario dealership being used in this fashion. It is not necessary.  It is the Federal government’s responsibility, through FINTRAC, to identify sectors that raise concerns about money laundering. To date, despite the issue being raised over the past twenty years or more by OMVIC staff, FINTRAC apparently does not consider that the motor vehicle sales industry is a serious enough risk for money laundering activities such that it should be included in its reporting requirements. OMVIC and the Ontario government should allow FINTRAC to be the judge of whether it should include motor vehicle sales in Ontario as part of its large cash transaction reporting requirements. We urge the government not to wade into this area unless and until it is asked to do so by FINTRAC.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation about identifying/reducing the risk of money laundering through dealers, and will collaborate with the Ministry of Government and Consumer Services to work with the federal government to introduce a requirement for dealers to report cash transactions over a certain threshold to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). If implemented, OMVIC will work with FINTRAC to establish appropriate verification/inspection processes.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services will collaborate with the Ontario Motor Vehicle Industry Council to engage with the federal government on the possibility of the federal government requiring registered motor vehicle dealers to report cash transactions over $10,000 to the Financial Transactions and Reports Analysis Centre of Canada.

RECOMMENDATION 23 So that the information that the Ontario Motor Vehicle Industry Council (OMVIC) reports to the public is accurate, complete and consistent, we recommend that OMVIC annually report on:

  • the complete results of the consumer surveys it conducts and highlight areas where improvements are needed;
  • completed inspections and site visits separately; and
  • time spent to review registration applications, including staff time to follow up and collect missing information.

 

UCDA supports this recommendation.

 

OMVIC RESPONSE OMVIC agrees with the Auditor General’s recommendation and will make all results from the annual consumer awareness survey publicly available on our website and highlight areas for improvement. The results of our annual survey will also inform the development of objectives for the annual marketing plan to ensure we are addressing areas of low consumer awareness. OMVIC also agrees that public reporting must be accurate, complete and consistent. Therefore, we will ensure that terms such as completed inspections and site visits are defined clearly in our policies and procedures, and we will ensure these activities are reported separately.

Finally, OMVIC will develop a strategy to identify, capture and report on staff time spent on reviewing registration applications, including performing necessary follow-ups and collecting missing information.

RECOMMENDATION 24 So that the Ontario Motor Vehicle Industry Council’s (OMVIC’s) Board of Directors effectively executes its responsibilities to oversee motor vehicle dealers and protect consumers by bringing new perspectives to OMVIC, we recommend that OMVIC’s Board of Directors, work with the Ministry of Government and Consumer Services to:

  • establish fixed term limits for its Board members that are in line with best practices of existing authorities and other organizations similar to OMVIC;
  • reassess the proportion of industry representatives on OMVIC’s Board and compare it to the proportions in other delegated authorities; and
  • revise selection criteria for Board members to highlight qualifications that best serve consumer interests.

 

The UCDA disagrees with this recommendation. OMVIC, along with other Delegated Administrative Authorities (DAAs), was established with a mandate to operate as a self-managed non-government regulatory body; that is, to be overseen by government, but not as part of government. While the composition of the board can be changed by the Minister under the current regulations, the industry should continue to occupy at least half the positions on the board. The knowledge of the industry and experience of these board members has been, and should continue to be, utilized to help OMVIC staff, who may have limited or no industry knowledge or experience, to help them better understand the industry they are regulating.

 

As for terms for board members, these already exist. Each elected industry board member sits for three years. During this time, they gain further insight and understanding of OMVIC’s role and board policy-making functions. Knowledge and experience could not be used to enhance a board member’s contribution to the board if board members were restricted from standing for a second, third or subsequent, three-year term.

 

Dealer directors are elected by OMVIC members (dealers). This democratic process should not be interfered with lightly. Limiting the number of times a director is permitted to stand for election also raises a practical concern: the absence of qualified candidates in the industry who wish to participate in elections.  On several occasions, returning directors have been acclaimed to their positions. In the past, there have been occasions where a board position remained vacant because a director chose not to stand for re-election. In those instances, the board operated with less than the full contingent of directors established in OMVIC’s by-laws. It should be up to OMVIC members to decide whether an individual should be on the board through the election process.  

 

OMVIC RESPONSE OMVIC’s by laws establish the composition, terms of office and qualifications for elected Board members. Therefore, any amendment regarding term limits, representation or selection criteria would require approval by the membership (motor vehicle dealer registrants) at a properly constituted meeting. The administrative agreement between OMVIC and the Minister also requires that OMVIC obtain the Minister’s prior agreement to any changes to the bylaws or resolutions respecting Board composition, selection criteria and process and term of office of its members. In consultation with the Ministry of Government and Consumer Services, OMVIC agrees to reassess term limits, the proportion of industry representatives and its selection criteria in comparison to other delegated authorities, and to recommend to its membership that it approve any amendments agreed upon.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees that good governance is important and should be based on best practices. The Ministry appreciates the response from the Ontario Motor Vehicle Industry Council (OMVIC) to this recommendation and will work with OMVIC to ensure this recommendation is addressed. As required under the administrative agreement, the Ministry will review the proposals it receives from OMVIC for changes to its by-laws and develop options as necessary to address the recommendation. Currently, under the Safety and Consumer Statutes Administration Act, 1996, the Minister may establish competency criteria for members of the Board of Directors and establish rules about the nomination of board members, the appointment or election process, the length of their terms and whether they may be reappointed or re-elected.

RECOMMENDATION 25 So that the Ontario Motor Vehicle Industry Council (OMVIC) is effectively and transparently governed, we recommend that OMVIC’s Board of Directors and the Compensation Fund’s Board of Trustees:

  • establish and follow a protocol to ensure procurement of third-party services are well documented, transparent, free from any biases, and best suit the needs of OMVIC and its Compensation Fund; and
  • establish clear policies that address actual, potential and perceived conflicts of interest.

 

UCDA supports this recommendation.

 

OMVIC RESPONSE The Ontario Motor Vehicle Industry Council (OMVIC) and the Compensation Fund’s Board of Trustees agree to establish and follow protocols to ensure that the procurement of third-party services is transparent and best suits the needs of OMVIC and the Compensation Fund. OMVIC and the Compensation Fund’s Board of Trustees also agree to review and revise their Codes of Conduct and Conflict of Interest Policies and guidelines to ensure that they are clear and effectively address requirements in the event of actual and perceived conflicts of interest.

 

RECOMMENDATION 26 So that the Compensation Fund’s Board of Trustees can exercise its independent authority to manage and administer the Compensation Fund, we recommend that the Ministry of Government and Consumer Services:

  • amend the regulation to disallow the Ontario Motor Vehicle Industry Council (OMVIC) Board from appointing its own Board Members onto the Compensation Fund’s Board of Trustees; and
  • clarify the roles and responsibilities of the Compensation Fund’s Board of Trustees in the administrative agreement with OMVIC to reflect its independent authority with respect to the Compensation Fund.

 

UCDA takes no position on this, but as in our response to Recommendation 24, we point out the practical difficulty of finding qualified individuals who wish to sit on the board. This applies equally to both the Compensation Fund’s board of trustees and OMVIC’s board of directors.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees that the Board of Trustees’ independence in managing the Motor Vehicle Dealer Compensation Fund is important. The Ministry will work with the Ontario Motor Vehicle Industry Council (OMVIC) to update the administrative agreement and will examine how the Board of Trustees’ role could be clarified within the administrative agreement. The Ministry will develop options for potential regulatory amendments with respect to appointments to the Board of Trustees for the government’s consideration, which will be informed by the Auditor General’s recommendations. Should the government choose to move forward with this recommendation, changes would be implemented accordingly.

RECOMMENDATION 27 So that the Ontario Motor Vehicle Industry Council’s (OMVIC’s) resources are used more economically, we recommend that OMVIC and its Board of Directors:

  • more closely align its reimbursement policy with the Ontario government’s Travel, Meal and Hospitality Expenses Directive;
  • disallow any reimbursement of alcoholic beverages;
  • remove the Board Chair’s ability to override the meal rates established in the expense policy; and
  • utilize OMVIC’s boardroom to minimize the costs of Board and Board committee meetings.

 

UCDA takes no position on this recommendation.

 

OMVIC RESPONSE OMVIC understands the recommendation of the Auditor General regarding alignment with the Ontario Travel, Meal and Hospitality Expenses Directive. OMVIC will conduct a review of its existing Travel, Meal and Hospitality Policy relative to the Ontario government’s Travel, Meal and Hospitality Expenses Directive. This analysis will allow OMVIC to determine the appropriate reimbursable meal rates, and ensure that such rates are also in alignment with OMVIC’s responsibilities under its administrative agreement with the Minister of Government and Consumer Services. OMVIC agrees that, in accordance with its Administrative Agreement, its Travel and Meal Expense Policy must adhere to the spirit of the Ontario Public Service Travel, Meal and Hospitality Expenses Directive. OMVIC will review its policy with the Ministry of Government and Consumer Services, including the reimbursement of alcoholic beverages and discretion on meal rates, and update it to ensure it aligns with the spirit of the Ontario Public Service Directive. OMVIC agrees with the Auditor General’s recommendation and will endeavour to use OMVIC’s boardroom for Board of Director, committee and Compensation Fund’s Board of Trustee meetings, when it is appropriate to do so. Beginning in 2019, OMVIC changed many of its traditional in-person committee and Board meetings to virtual meetings, and since March 2020 with the onset of the COVID-19 pandemic, all meetings have been held virtually. The adoption of virtual meeting formats has resulted in savings. Some in[1]person meetings may involve audiences of greater than 20 people and may therefore require an external venue to allow for appropriate physical distancing and participant engagement.

RECOMMENDATION 28 So that the Ministry of Government and Consumer Services (Ministry) fulfills its responsibility to effectively oversee that the Ontario Motor Vehicle Industry Council (OMVIC) meets its mandate and operates in compliance with applicable requirements, we recommend that the Ministry:

  • require that OMVIC periodically report to the Ministry on its progress in using the additional revenues it is collecting to meet the objectives of its 2015 business case;
  • set a reasonable deadline for OMVIC to comply with its administrative agreement with the Minister to operate on a cost-recovery basis; and
  • monitor and take corrective action to ensure that OMVIC complies.

 

UCDA recently met with the Minister and stressed our support for Ministry supervision of OMVIC. We agree with the recommendation that the Ministry should efficiently and effectively provide oversight of OMVIC’s programs and activities.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees that it can improve in its oversight function of the Ontario Motor Vehicle Industry Council (OMVIC). Approaches for improving the Ministry’s oversight function will be informed by the Auditor General’s recommendations. In addition, the Ministry will work with OMVIC to update the administrative agreement and will examine incorporating into the administrative agreement a report back on fee changes made by OMVIC.

RECOMMENDATION 29 So that serious concerns raised about the Ontario Motor Vehicle Industry Council (OMVIC) are appropriately addressed, we recommend that the Ministry of Government and Consumer Services (Ministry) establish a protocol to exercise its authority under the administrative agreement between the Minister and OMVIC to conduct a review when serious complaints arise.

 

The UCDA supports this recommendation and Ministry supervision of OMVIC.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) will work with the Ontario Motor Vehicle Industry Council to update the administrative agreement. The Ministry will examine how a protocol to exercise its authority to conduct a review when serious complaints arise can be incorporated within the administrative agreement.

RECOMMENDATION 30 So that the Ministry of Government and Consumer Services (Ministry) can effectively monitor and address the Ontario Motor Vehicle Industry Council’s (OMVIC’s) performance in protecting consumers and regulating motor vehicle dealers, we recommend that the Ministry revise the performance indicators it uses to monitor OMVIC’s performance to include indicators that more closely monitor OMVIC’s operations, including in the areas of inspection, registration, consumer complaint handling, the Compensation Fund, and educating and informing consumers about their rights and protections in purchasing a car.

 

The UCDA supports this recommendation and Ministry supervision of OMVIC.

 

MINISTRY RESPONSE The Ministry of Government and Consumer Services (Ministry) agrees with this recommendation and will work with the Ontario Motor Vehicle Industry Council (OMVIC) to revise the indicators the Ministry uses to monitor OMVIC’s performance.

UCDA Submission on MVDA Reform

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 w.barnard@ucda.org

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 mvda@ontario.ca.

 

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.

Protecting Consumers

 

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

As with the previous version of the Motor Vehicle Dealers Act, the “new” Motor Vehicle Dealers Act, 2002 (“MVDA, 2002”) incorporates all the powers of prosecution and revocation OMVIC previously exercised with respect to motor vehicle dealers and salespeople, but with a vastly increased scope.

One area in which OMVIC has excelled is in the prosecution of “curbsiders”.  These illegal vehicle retailers pose a real and present danger to consumers because, while they pose as legitimate private sellers, they are actually in the unregulated motor vehicle sales business.  They foist, without declarations of any kind, vehicles on innocent buyers that have suffered serious accident damage, are encumbered by liens, have rolled-back odometers and various hidden histories. 

The MVDA, 2002 bolsters OMVIC’s efforts in this regard with robust minimum fines that start at $2,500 for such offences.  This proposal is silent about the obvious use of AMPs against illegally operating non-registrants, targeting, as it does, only the legitimate body of registered dealers and salespeople.

In addition, since 2010, with the introduction of the MVDA, 2002, OMVIC’s internal dealer discipline process has been formally recognized by Ontario law.  The fines can be very steep. It’s not uncommon to see penalties of more than $10,000.  The maximum is, of course, $25,000.

The panel then reaches a decision about whether the dealer has breached the MVDA, 2002 Code of Ethics and if it believes the registrant has, can impose punishment i.e. fines, education course, etc.

 

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.on.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.

UCDA Proposal to Reduce Red Tape

April 19, 2023

 

The Honourable Parm Gill

Minister of Red Tape Reduction

Ministry of Red Tape Reduction

7th Floor

56 Wellesley Street West

Toronto, ON  M7A 2E7

 

Dear Minister Gill,

 

Re: Proposals to Reduce Burden, Improve Regulatory Efficiency, and Protect Consumers

 

I am writing on behalf of the Used Car Dealers Association of Ontario (“UCDA”) to submit our recommendations for the reduction of red tape for motor vehicle dealer businesses that our members operate throughout the province.

 

UCDA is a non-profit association of motor vehicle dealers with almost 5,000 members who operate in more than 500 communities across Ontario. We work with members to ensure a fair and informed used vehicle buying experience for consumers in Ontario.

 

Over the years we have worked with your Ministry and others on a variety of issues including the reduction of red tape for small businesses across the province. We congratulate your government for continually implementing measures that help businesses grow and which allow the public to engage with them in a more efficient and timely manner.

 

Several years ago, the Ministry of Government and Consumer Services (as it then was), undertook consultations on the provisions of the Motor Vehicle Dealers Act and regulations with a view to reducing burdensome and inefficient provisions that amounted to unnecessary red tape. We wish to follow up on the work that was undertaken and are pleased to make the following recommendations. 

 

Classes of Motor Vehicle Dealers

 

Sections 18 to 25 of Ontario Regulation 333/08 made pursuant to the Motor Vehicle Dealers Act, 2002 (“MVDA”) provides for classes of motor vehicle dealers and the authorized activities for each class of dealer. These include: general dealers, brokers, wholesalers, exporters, outside Ontario dealer, lease finance dealer and fleet lessor. 

UCDA is concerned with the legislative restrictions imposed on the wholesaler and exporter classes:

 

Wholesalers: Pursuant to section 21 of O.Reg 333/08, a motor vehicle dealer registered as a wholesaler may not act as a motor vehicle dealer, other than:

  • to trade in motor vehicles with other registered motor vehicle dealers
  • to sell motor vehicles at an auction, among others, to a person who is located in another jurisdiction and registered in that jurisdiction as a person with equivalent status to a registered motor vehicle dealer.

 

In other words, wholesalers may not trade in motor vehicles with members of the public.

 

Exporters: Pursuant to section 22 of O.Reg 333/08, a motor vehicle dealer registered as an exporter may not act as a motor vehicle dealer other than to buy motor vehicles for the purpose of export outside of Ontario. 

 

The Need for Amendment of O.Reg 333/0:

 

Wholesalers were negatively affected by the pandemic, as their usual sources of inventory, such as auctions, were not available. With a lower supply, many new car dealers, another big source of inventory for wholesalers, retained the used inventory they could obtain for sale to the public. The traditional model for sourcing used vehicles no longer worked for many wholesalers. They looked to sourcing vehicles privately, which, under the regulation, they are not permitted to do since that would mean dealing with the public.

 

Some wholesalers also wished to access the export market which remained relatively strong during the pandemic due to high American dealer demand. Unfortunately, wholesalers are not permitted to sell to dealers outside of Ontario. They can only deal with “registered motor vehicle dealers”, which by definition, means dealers registered in Ontario. The only exception to this is if the wholesaler sells through a wholesale auction, where the purchaser is a dealer from another jurisdiction with equivalent status to the Ontario registered dealer. Otherwise, only general dealers (retailers) and exporters can sell to non-Ontario dealers.

 

If a wholesaler decided to change its status from wholesaler to exporter, to allow them to sell to dealers outside of Ontario, they would be restricted solely to that market and lose the right to sell to other Ontario registered dealers. Given that a dealer cannot be both an exporter and a wholesaler, their ability to trade in motor vehicles is severely restricted.

 

The UCDA recommends that O.Reg. 333/08 be amended so that registered Ontario motor vehicle dealers are able to buy and sell vehicles from private sources and to buy and sell vehicles to dealers outside of Ontario regardless of whether they are classified as wholesalers or exporters as the case may be. The definitions of the current classes of dealers unduly restrict dealers from fully operating their businesses as was clear during the pandemic. The changes being proposed provide an enhanced level of commercial flexibility and viability, especially when public emergencies prevent them from carrying on their normal course of business.

Removing the requirement for registrants to return their registration certificates

 

Pursuant to subsections 29(7) and 29(8) of O.Reg 333/08, registrants are required to return their certificate of registration to the registrar when they cease to be registrants. During consultations on the  Motor Vehicles Act, 2002, (the “MVDA”) the Ministry proposed the removal of this requirement. UCDA fully supports this proposal for the following reasons:

 

  1. The current requirement is very difficult to enforce.
  2. The Ontario Motor Vehicles Industry Council (“OMVIC”) has been issuing electronic certificates to registrants since March 2020, thereby making the requirement for registrants to return their certificate of registration outdated.
  3. While the savings would be modest, the proposal will nevertheless save registrants the cost of returning the certificate to OMVIC.

 

UCDA also agrees that there is a risk to consumers that dealers or salespersons who are no longer registered would retain their certificates and use it to act as registrants. To mitigate that risk, OMVIC should 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.

 

Reducing burden in the day-to-day operations of registrants

 

Extending the time period for the return of warranty documentation and payments received

 

The Ministry proposed an extension of the period of time for dealers to provide a warranty seller with required warranty documentation and payments received from consumers from seven to thirty days.

Pursuant to subsection 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.

 

It is often difficult for dealers to provide the required documentation and payments received within the seven-day period; 30 days is more reasonably aligned with industry practice. In fact, warranty sellers often require dealers to submit warranty payments and documentation on a monthly basis. This change will have no impact on consumers.

 

We do recognize that there may be circumstances in which 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. However, this risk is present regardless of the turnaround time. As a practical matter, however, the longer the time period the more likely it is that this may occur without it being discovered. For that reason, we recommend 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. 

 

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. The rationale for these changes  was set out in the Ministry’s consultation document:

 

Subsections 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.

UCDA agrees that there are opportunities to tighten up disclosure requirements in the regulations made pursuant to the MVDA.  For example, the requirements for registering vehicles that were previously registered in another province requires amendment. While a consumer might not be concerned about whether a vehicle was registered in another province, it might nevertheless be difficult for an Ontario dealer to be aware of that registration many years later. 

 

While OMVIC’s concerns about different safety standards in other provinces, even assuming that concern is justified, would have less relevance after a vehicle has been operational in Ontario for months and years after arrival in Ontario. For reasons of consistency, if the Ministry wishes to maintain a declaration requirement, we recommend that it should mirror the declaration requirement that applies to rental vehicles: if the vehicle is not previously owned by a consumer in Ontario, then that fact must be declared. Having said that, we question the need for a declaration relating to rental vehicles. It has never been accurate to state that any of these vehicles are less trustworthy than other used vehicles. In

 

fact, it may be argued that they might be better maintained by owners than many privately owned used vehicles, as those owners have a vested interest in preserving retail values.

 

We also recommend that the delivery date requirement be removed from a contract of sale. From our experience, this requirement is more honoured in the breach.  Most dealers and consumers conclude sale agreements with that date left blank, as both parties know the vehicle will be made ready in a reasonable time.  Sometimes that schedule can vary due to holidays or mechanic availability so some flexibility is required. Rarely do we receive complaints about this issue.

 

We further recommend that the requirement to disclose the provisions of the Canadian Motor Vehicle Arbitration Plan (“CAMVAP”) be removed. CAMVAP, under which consumers and manufacturers can resolve various disputes, including those relating to material defects or the application of the new vehicle warranty, applies to relatively few used vehicles. Moreover, there are fewer and fewer manufacturers participating 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 become aware of the plan if they do not read the sale agreement.  

 

UCDA opposed the requirement for a declaration about repair costs greater than $3,000 when it was first introduced in 2010.  What we foresaw would happen has actually happened in that some dealers feel that if a vehicle repair is less than $3,000, they do not have to declare a prior repair incident. We maintained then, and continue to believe that “material fact” disclosure is more flexible, workable and relevant to the consumer. However, if the Ministry believes that a dollar threshold must be maintained, we recommend that it be raised to a more realistic amount such as $5,000. In 2023, 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.

 

Finally, we recommend that disclosure relating to replaced panels be removed. From our experience, we not believe that the mere fact that two or more body panels have been replaced, other than bumper panels, is of concern or interest to a consumer. Previous accident damage is of concern to a consumer and we have commented on that above. The reality is that panels can be replaced because of rust, body-work or other cosmetic reasons not related to accident damage and should therefore not be a stand-alone declaration absent any material fact background.

Protecting Consumers

 

Increasing the minimum fine for acting as a registered motor vehicle dealer or salesperson

 

UCDA supports the Ministry’s proposal 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).

 

The Ministry has noted that fines levied pursuant to 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. For example, OMVIC has 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.

 

We agree with the Ministry position that “curbsiding” and acting as a salesperson while unregistered continue to be common issues in the marketplace and that an 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.

Adding provisions to the Code of Ethics

 

The ministry proposed that 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.

 

The UCDA supports this proposal are in favour of requirements that 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 another dealer at an auction and the condition of the vehicle is such that engine light is off, but it subsequently is illuminated after 48 hours, this issue cannot be arbitrated because the time for initiating auction arbitration is limited to 48 hours after the purchase. OMVIC has been reluctant to get involved in disputes between dealers as consumers are not involved.  If the purchasing buying dealer commences legal action against the seller, the auction house might bar the dealer from engaging in future business with them, so the purchasing 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. For example, in a dealer-to dealer sale, at auction or otherwise, the law is clear that pollution controls must be functioning on all vehicles sold in Ontario. However, appears to be a controversial proposition in some wholesale transactions, where “as is” is interpreted to mean “what you see is what you get”. This must be clarified.

Making Housekeeping Amendments

 

UCDA supports the Ministry’s proposal to implement housekeeping amendments to the MVDA and the General Regulation as follows:

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

We are confident that these recommendations, if implemented, will reduce the regulatory burden on motor vehicle dealers while at the same time offer further protections to consumers. We would be pleased to discuss these proposals with you at your convenience.

 

Yours truly, 

 

 

James F. Hamilton

Interim Manager and Legal Services Director

 

 

cc Sam Oosterhoff, MPP for Niagara West, Parliamentary Assistant to the Minister of Red Tape Reduction; Robert Thompson, Chief of Staff to the Minister of Red Tape Reduction

MVIS Licence Renewal For 2024

MVIS licence renewal for 2024

Ministry of Transportation

Commercial Safety and  

Compliance Branch

301 St. Paul Street, 3rd Floor

St. Catharines ON, L2R 7R4

mvis.civa@ontario.ca

 Ministère des transports

Direction de la sécurité et de la conformité

en matière de transport commercial

301, rue Saint-Paul, 3e étage

St. Catharines ON, L2R 7R4

mvis.civa@ontario.ca

 

                                                                                   Subject: Important information about your MVIS licence renewal for 2024.

 

 

Recently I wrote to you to advise of the Ministry of Transportation’s (MTO) decision to extend the current Motor Vehicle Inspection Station (MVIS) Program to allow more time for MVIS clients to transition to the new DriveON program.

 

As a result of MTO extending the current MVIS Program, the ministry has also made the decision to waive the MVIS licensing and technician fees for 2024 (January 1st to December 31st, 2024) to ease financial and administrative burden for MVIS clients as they transition to DriveON.

 

In order for the ministry to waive these fees and ensure your licence remains active in our system, your licensing and technician fees must be paid in full for the 2023 calendar year (January 1st to December 31st, 2023).

 

Additionally, should you need to add or remove technicians from your MVIS throughout the 2024 calendar year, you will still be required to submit an updated “Registered List of Technicians”, however, you will not need to include a fee payment for that transaction.

 

If you have already submitted your renewal application for your MVIS licence for the 2023 calendar year, there is no further action required on your part.

 

To ensure you are receiving the most up-to-date information regarding the MVIS and DriveON programs, it is important you have a current and valid (correct spelling) e-mail address on file with the MTO. To update or correct your e-mail address on file with us, please email mvis.civa@ontario.ca.

 

If you have any questions about the new DriveON program, please contact the Vehicle Inspection Centre Assistance Line toll free at 1-833-420-2110 or email VIC@driveonportal.com

 

If you have any questions about the MVIS Program, please contact MTO toll free at 1-800-387-7736 or e-mail cvor@ontario.ca.

 

Sincerely,

 

“Original Signed By”

 

Jennifer Elliott

A/Director

 

Canada Day

DEALER ALERT: ILLEGAL AUCTION IN BARRIE, ONTARIO

Dealers are at risk by participating in the illegal Coast 2 Coast vehicle auction in Barrie July 6‐9,

2023.

 

Coast 2 Coast Collector Car Auctions, legally referred to as Associated Auto Auction Ltd., has

been notified by the Ontario Motor Vehicle Industry Council (OMVIC) that this auction is

unlawful. Any participation in this auction puts you at risk!

 

THIS IS AN ILLEGAL AUCTION!

Coast 2 Coast Collector Car Auctions, legally referred to as Associated Auto Auction Ltd., has

been put on notice by the Ontario Motor Vehicle Industry Council (OMVIC) that this auction is

unlawful. OMVIC investigators are on site to inform participants about the risks associated with

taking part in this auction.

 

As the regulator of motor vehicle sales in Ontario, OMVIC’s mandate is to maintain a fair and

informed marketplace by protecting the rights of consumers, enhancing industry

professionalism, and ensuring fair, honest and open competition for registered motor vehicle

dealers. Auctions that sell motor vehicles directly to consumers are considered motor vehicle

dealers and must be registered with OMVIC. That’s the law.

 

COAST 2 COAST COLLECTOR CAR AUCTIONS IS NOT REGISTERED TO SELL OR TRADE MOTOR

VEHICLES IN ONTARIO!

Coast 2 Coast Collector Car Auctions is operating illegally and does not meet the requirements

in the Motor Vehicle Dealers Act (MVDA) to sell vehicles in Ontario. By participating in their

auction, you are putting your dealership at risk. Don’t let yourself become a victim of their

illegal activities.

 

CONTACT OMVIC.

If you have any information about the Coast2Coast auction that you would like to provide to

OMVIC to support our investigation and efforts to protect consumers, please contact our

Curbsider Hotline: 1‐888‐NO‐CURBS (662‐8727) or at nocurbs@omvic.on.ca

 

You can also contact OMVIC’s dealer support team at dealers@omvic.on.ca or 1‐800‐943‐6002

ext. 4 if you have any questions.