Service Nova Scotia Minister John MacDonell said the legislative changes proposed Wednesday are a response to the growing debt management industry, particularly in the field of credit card debt.
"Today's legislation will ensure Nova Scotians struggling to meet their financial obligations do not fall victim to aggressive marketing practices and unrealistic promises of huge debt reductions by these organizations," MacDonell said in a statement.
MacDonell said the rules would apply to all debt management companies operating in the province, including those based elsewhere.
He said the companies would need to be licenced to operate in Nova Scotia under the changes and would face a cap on fees for their services, which could only be charged once a settlement agreement is reached with a creditor.
The cap is yet to be worked out in the regulations, but Cameron MacNeil, an executive director with the department, said it would be in line with what's being done in other provinces.
"For a fixed payment it's 10 per cent and for ongoing or periodic payments it's 15 per cent," said MacNeil.
The department says maximum fines for not following the regulations would also be increased, from $1,000 to $25,000 for an individual and from $10,000 to $300,000 for a corporation.
Collection agencies meanwhile, would require written authorization from creditors in order to collect a debt and would be limited to contacting people three times within a seven-day period.
Officials said the new rules are based on best practices in place in provinces such as Ontario, Alberta, Manitoba and New Brunswick and should be in place within six months.Suggest a correction