New security requirements for consignment dealers

DATE: | Industry bulletins

Beginning Sept. 1, 2018, AMVIC is implementing a significant change to the security requirement for licensed consignment businesses.

New consignment businesses applying for the AMVIC consignment licence will need to provide a minimum $300,000 security in the form of cash or an irrevocable letter of credit or bond, in order to complete their application.

Current consignment businesses will be grandfathered into the new requirement by submitting additional security every year at time of licence renewal in increments until reaching a minimum of $300,000. Businesses may choose to provide the additional security to $300,000 all at once during the time of licence renewal. Current businesses will also be given the opportunity to cancel their consignment licence and cease all consignment-related activities.

These changes are designed to provide both consumers and industry with additional financial protection. Affected consignment businesses will be notified with specific details as renewal dates approach.

The AMVIC Licensing Policy requires all consignment businesses to provide security in the form of cash or an irrevocable letter of credit or bond to protect consumers from losses caused by bad business practices and to mitigate the impact on the Consumer Compensation Fund.

Section 4(2) of the Automotive Business Regulation states that “[t]he Director may require an applicant for a class of automotive business licence to furnish a security in a form and amount approved by the Director.”

Please call AMVIC’s Licensing department at 1-877-979-8100 ext. 2001 for more information.