Directive No. 1R4 – Frequently Asked Questions (FAQs)


In the event of an inconsistency between Directive No. 1R4 and the FAQs, the Directive prevails.

New Implementation-related questions

Registration – related questions

Credit counsellors

Q: Are firms or individuals that operate as a non-profit or registered charity organization exempt from the “ineligible activities” requirements of Directive No. 1R4?

A: There are a wide variety of intermediaries and referral arrangers that operate as credit counsellors.  Eligibility to be registered by a Licensed Insolvency Trustee (LIT) is based on whether the activities of the registrant are consistent with the LIT’s obligations under the Bankruptcy and Insolvency Act (BIA), as opposed to the taxable status of the organization for which they work.  Working for charitable or not-for-profit organizations does not confer an “exemption” from ineligible activities, as described in paragraph 13 of the Directive. Regardless of the name of the third-party employer, LITs need to conduct sufficient due diligence to ensure the activities of an individual they intend to register as a BIA insolvency counsellor meet eligibility requirements.

Q: If a credit counsellor works for or is associated with an organization that offers debt management plans (DMP), are they ineligible to be registered as a BIA Insolvency Counsellor?

A: Typically a DMP is established for someone who is in a position to repay the full amount of their outstanding debt over a period of time, and where the individual is not filing for insolvency under the BIA, and is not referred to an LIT for bankruptcy or proposal services. Provided the organization or individual does not charge fees to insolvent persons who are in need of BIA services, an individual or organization that provides DMPs would not be precluded from being eligible to be registered by an LIT as a BIA Insolvency Counsellor, if they also meet all other eligibility requirements (paragraph 12 of the Directive). For clarity, firms or individuals who charge debtors in need of BIA services a fee before or after referring them on to an LIT are not eligible for registration (paragraph 13 of the Directive).

Q: Can I register an independent counsellor, who is not associated with any credit counselling organization, as a BIA Insolvency Counsellor?

A: Licensed Insolvency Trustees may register any third-party counsellor provided the individual meets the registration eligibility requirements (paragraph 12 of the Directive) and are not ineligible (paragraph 13 of the Directive).

Q: Can I register an individual as a BIA Insolvency Counsellor if they also work as a mortgage broker or a real estate agent?

A: No. LITs shall apply due care to ensure that the actions carried out by an individual they propose to be registered against their licence as a BIA Insolvency Counsellor are carried out in accordance with the same professional standards that those LITs themselves are required to follow (Bankruptcy and Insolvency General Rules, Rule 52). Thus, the requirement that an LIT not practise an incompatible activity applies equally to a BIA Insolvency Counsellor upon whom an LIT may rely when providing for counselling.


Q: Can I register an individual as a BIA Insolvency Counsellor who has previously acted as an intermediary?

A: Intermediaries are ineligible to be registered as BIA Insolvency Counsellors. A former intermediary, who now works and can demonstrate employment in a different occupation, may be eligible to be registered. In requesting the registration of a former intermediary against their licence, the LIT would need to be able to demonstrate that the individual has substantively changed their occupation, sources of income and association with intermediaries, and has ceased to engage, directly or indirectly, in ineligible activities, all for a period of not less than 6 months prior to the date that the LIT submits the registration request. The LIT would also need to ensure that the registrant meets all registration requirements (paragraph 12 of the Directive) and that they were not ineligible (paragraph 13 of the Directive).

Q: Does counselling experience gained while working for an intermediary count towards the experience required to qualify for registration as a BIA Insolvency Counsellor under Directive No. 1R4?

A: Only if an individual had been registered with the Office of the Superintendent of Bankruptcy (OSB) prior to the issuance of Directive No. 1R4 on January 29, 2018 and met the eligibility requirements under the Directive’s transitional provisions. Gaining experience in delivering BIA insolvency counselling needs to occur in an organization operating under an LIT’s professional oversight and control, in accordance with the Code of Ethics for Trustees and other BIA requirements.

Ineligibility for registration due to referral arrangements

Q: Before I request to register a third-party individual against my licence as a BIA Insolvency Counsellor, how can I ensure they are not acting as a referral arranger?

A:  You should ensure third party individuals whom you request to register against your licence as BIA insolvency counsellors are not involved in intermediary activities and that they provide an open and transparent choice of LITs to any debtors who may be in need of BIA services (using, for example, a list of LITs published on the third party’s website, or using the “Find a Licensed Insolvency Trustee” function on the OSB website). Reference should be made to the Directive for specific information on direct and indirect referral arrangements. OSB compliance monitoring will be risk based, and focussed on substantive patterns of non-compliance.

Transitional provisions

Q: I would like to register a previously registered individual who does not meet the amended education, knowledge and experience requirements in paragraph 12 of Directive No. 1R4.

A: The OSB has put in place transitional provisions that provide an alternative way to validate the counsellor’s competency. To register an individual against their licence, LITs can attest and demonstrate the competence of the counsellor based on education and experience (see paragraphs 38-40 of the Directive).

Q: Will I need to submit a new registration for someone who has been previously registered with the OSB, prior to the issuance of Directive No. 1R4?

A: Yes. As of October 1, 2018, LITs will need to have registered individuals upon whom they will rely to provide for BIA insolvency counselling.

Registration process

Q: Can a BIA Insolvency Counsellor be registered against the individual licence of more than one LIT?

A: Yes. However, each LIT must complete and submit a separate Form A (individual registration) for that BIA Insolvency Counsellor. 

Q: Does having a unique BIA counsellor number enable an individual to provide BIA insolvency counselling for any LIT, regardless of LIT firm?

A: No. A BIA Insolvency Counsellor can only perform insolvency counselling under the accountability of the licence of the LIT who registered them. Each LIT is responsible to ensure the individual meets registration requirements. In completing Form A (individual registration), the LIT is attesting that the individual meets the registration eligibility requirements (paragraph 12 of the Directive). An individual counsellor who is also registered against the corporate licence of an LIT firm may be assigned counselling on behalf of any LIT in the firm.

Q: If an LIT’s request for a BIA Insolvency Counsellor registration cannot be validated, will the OSB provide reasons why?

A: The LIT and/or the LIT-in-charge attests that a registrant meets all BIA Insolvency Counsellor registration requirements as part of the registration process.  Where review of a registration request identifies concerns about eligibility, the OSB will notify the LIT and seek to clarify and/or confirm a specific attestation.   Where a registration request cannot be validated, the LIT is informed which element of the Directive has not been satisfied.

Q: I would like to register an individual who was previously registered with the OSB (January 29, 2018) and whose 50 counselling sessions are a combination of sessions performed with my firm and some sessions performed while with a previous LIT firm. As I cannot produce the list of sessions performed for the previous firm, can I register this individual?
(Added on 2018-05-28)

A: When registering a counsellor under the transitional provisions of the Directive, it may occur that the minimum 50 counselling sessions provided under the Act comprise a combination of sessions delivered on behalf of the registering LIT and a previous LIT in a different firm. Where this is the case, the registering LIT may demonstrate that the experience requirement is met by providing a list of the sessions completed in the registering LIT’s firm, and the number of sessions delivered for the previous LIT firm. Please also provide the name, phone number and duration of employment with the previous LIT firm.

Q: My proposed counsellor will not have obtained the required number of counselling hours by the end of my three-week block of registration time provided by the OSB. What should I do?
(Added on 2018-05-28)

A: LITs may register counsellors who meet the qualification requirements included in the Directive, including the experience requirements in paragraph 12(f) or under the transitional provisions in paragraph 39. If an individual proposed to be registered will not meet the experience requirements before the end of an LIT’s assigned three-week block of registration, then the registration may be submitted later, once all requirements under the Directive are met.

Q: Does the LIT submitting Form A have to directly observe the required three counselling sessions for every individual they wish to register against their licence?
(Added on 2018-05-28)

A: Yes. The registering LIT’s attestation that the individual possesses the required knowledge and competencies is based on personal validation through direct observation of the individual providing a minimum of three counselling sessions to individual bankrupts or consumer debtors on whose behalf the LIT has filed an insolvency proceeding. However, note that where the individual to be registered was previously registered with the OSB, prior to January 29, 2018, and where a Form B (corporate registration) is also being submitted for the individual, the OSB has waived the requirement to provide the specific three estate numbers and counselling information for the sessions observed by the Form A LIT.

New Implementation-related questions

(Added on 2018-08-10)

Coming into force

Q: The new schedules under Directive No. 1R4 are required starting October 1, 2018 (the Insolvency Counselling Disclosure and Assignment Form and Insolvency Counselling Completion Form). Are the new forms required only for new bankruptcies and consumer proposals filed on or after October 1, 2018?

A: Beginning October 1, 2018, the required use of the Schedules in Directive No. 1R4 applies to all consumer files. This includes consumer insolvencies filed prior to October 1, 2018, if one or more of the counselling sessions have yet to be provided. For example, if you have provided the first counselling session prior to October 1, 2018, but not the second session, you will need to submit Schedule I (Insolvency Counselling Disclosure and Assignment) prior to the second session and Schedule II (Insolvency Counselling Completion) following the second session.

Coming-into-force provisions of Directive No. 1R4 are in paragraph 41.


Q: My insolvency software provider has made a new version available. Should I update my software before October 1, 2018?

A: LITs should update their insolvency software to the newest version once made available by the software provider. LITs may use the updated software and complete Directive No. 1R4’s Schedule I (Insolvency Counselling Disclosure and Assignment) and Schedule II (Insolvency Counselling Completion) to document counselling sessions prior to October 1, 2018, in satisfaction of Directive No. 1R3. Alternatively, LITs may continue to document counselling sessions carried out prior to October 1, 2018, using the Directive No. 1R3 first stage and second stage counselling certificates, available via the OSB website. LITs should ensure their software has been upgraded by October 1, 2018, as the required use of Directive No. 1R4 Schedules are required as of that date.

Request for variance

(Added on 2018-09-18)

Q: I have submitted a Request for Variance, do I need to wait for a variance number before proceeding with counselling?

A: No. LITs may submit Schedule III (Request for Variance) where extraordinary circumstances prevent insolvency counselling from being performed in accordance with paragraphs 20(1) and (2) or 21(1) of the Directive. LITs do not need to wait for receipt of the variance number from the OSB before proceeding. The OSB will routinely process a request for variance within 4 business days. Inquiries about delayed variances should be submitted to the National Insolvency Counselling Compliance Team ( LITs will need to enter the variance number when submitting Schedule II (Insolvency Counselling Completion) to the OSB.

The OSB uses information provided in Schedule III for both regulatory analysis and compliance monitoring.

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