|Electronic record-keeping for registrants
|S. 52 (1) - Motor Vehicle Dealer Records and Accounts
Electronic records are acceptable if registrants comply with the established guidelines.
The Ontario Motor Vehicle Industry Council (OMVIC) administers and enforces the Motor Vehicle Dealers Act, 2002 (MVDA), its regulations and code of ethics, as well as relevant sections of the Consumer Protection Act (CPA), on behalf of Ontario’s Ministry of Government and Consumer Services. 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.
Just as OMVIC and other organizations are doing, many registrants are moving to electronic records management and paperless processes. These processes allow for quick retrieval and effective organization of files and free up physical space that registrants can use for other purposes. All these changes have resulted in an increased need for registrants to manage and maintain records electronically. The current legislation doesn’t speak specifically to electronic record keeping.
Several registered dealers have asked for OMVIC’s position regarding the creation, maintenance and management of electronic records and whether electronic records comply with the relevant legislation and regulations.
As a result, in the fall of 2021, OMVIC consulted stakeholders, including industry associations, and asked for their views on what guidance OMVIC can provide on electronic record-keeping.
This document reflects that advice and is intended to support the industry in meeting the most appropriate current standards.
There are several sections of Ontario Regulation 333/08 – including S.52, 53, 54 and others – that set out the required records that registered dealers must maintain and how long they must be retained. Specifically, the registered dealer must keep a record of all employees, positions they hold, dates of employment, how much they are paid, proof of payment, records related to the financing of the business, etc. The dealer must also keep records related to:
Dealers must also ensure that they are familiar with the MVDA’s requirements for access to documents and files. For example, when a representative of the Registrar requests records under Section 14 of the MVDA, such as when there has been a complaint, they can request information from the dealer. There is an additional requirement under Section 15 of the MVDA that the dealer provide the relevant records related to inspection without obstruction.
Registrants must keep these records for six years at a location approved by the Registrar. The format in which these records must be maintained is not specified within the MVDA, nor is the treatment of original documents, backup copies, or the disposal of records.
Generally, other provinces share similar legislative requirements to Ontario concerning records management. Only British Columbia and Quebec specify acceptable formats in which records may be maintained. Respectively, these are set out via policy citing that written records include electronic records, and the other relating to consumer protection legislation where the format is acceptable provided the consumer can easily retain it and print it.
Regardless of any guidelines or other documents OMVIC might produce, it is always advisable for registrants to ensure that their records meet the needs of their financial institutions and other regulatory bodies, such as the Canada Revenue Agency. They should also seek and obtain independent legal advice where necessary.
Subject to the Guidelines below, registrants may keep electronic records (either instead of or alongside paper records) and remain in compliance with the law, regulations, and Code of Ethics. Electronic record-keeping is an option, not a requirement. Registrants who wish to continue only keeping physical records may do so.
Sections 31 and/or 56 of Ontario Regulation 333/08 of the MVDA require registrants to notify the Registrar in writing within five days of any change in address for service. This requirement for approval of the Registrar extends to Registrants who choose to keep electronic records in a location controlled by a third party. This requirement would include, for example, records that are kept on an off-site server or in a cloud-based storage system.
OMVIC also recommends that registrants who are considering moving to electronic record-keeping, and those who have already done so, should ensure that any electronic records that are created or reproduced:
Registrants who choose a fully electronic approach to record-keeping should ensure proper disposal of their paper copies, for example, through a commercial shredding service. After records have been digitized, there is no further requirement from OMVIC’S perspective to keep the original paper copies. Before destroying paper copies, dealers should check whether they are required to keep them for any other purposes (e.g., franchisee agreements).
Q1: Why are you publishing a guideline, and how is it different than the bulletins and other communications we’ve seen in the past?
A1: As part of its commitment to be a modern regulator, OMVIC is looking at ways to update our guidance and support for dealers. Guidelines will provide more clarity and certainty. These guidelines are policy statements about what’s allowed and what’s not, subject to the provisions of the Motor Vehicle Dealers’ Act, 2002 (MVDA), its regulations and other provincial legislation that forms the basis of OMVIC’s work.
Q2: If they’re guidelines, does that mean the rules they spell out aren’t mandatory?
A2: Some of what’s in the guidelines is mandatory (for example, when it’s based on legislative or regulatory requirements, the Code of Ethics, Business Practices, etc.). In other cases, there’s a degree of flexibility. For example, with electronic records, dealers who choose to digitize their paper-based documentation can then safely dispose of those old documents unless they need them for some other purpose.
Q3: Does this mean that dealers are required to keep electronic records?
A3: No. It’s an option available to dealers who choose to take it. Electronic records may be kept alongside or instead of paper-based records. The requirements for what dealers are required to maintain and for how long remain the same. Please refer to the MVDA and its regulations for additional detail.
Q4: I have many years’ worth of paper records that I would like to digitize. Once I’ve done that, what do I do with all that paper?
A4: Once a dealer has digitized the business’s records, OMVIC takes the view that the dealer is then free to dispose of them safely and securely, such as by shredding. However, dealers may have other reasons to keep paper records after digitization. For example, they may continue to be needed for other legal, taxation or accounting reasons, as part of a franchisee agreement, etc. Dealers are advised to consult these other parties regarding their policies.
Q5: What are the advantages and disadvantages of creating electronic records?
A5: Electronic records require less physical space, they are more easily searchable, and they allow dealers more easily to keep all the records related to a single transaction in one place. The security risks associated with electronic records are very different, and dealers should ensure they take the appropriate steps to safeguard their electronic records. This would include, for example, ensuring the proper security and encryption safeguards are in place so that electronic records are only available to people who are entitled to access them. They must also be available to OMVIC inspectors or consumers upon request.
Q6: What are the new rules for storing electronic records in a cloud-based system?
A6: Under Sections 31 and/or 56 of Ontario Regulation 333/08 of the MVDA, dealers are required to notify the Registrar in writing within five days of any change in address for service. This requirement extends to dealers who choose to host their electronic records off-site, including cloud-based or third-party servers. Examples of cloud-based services include Microsoft OneNote, Google Docs, Dropbox, etc.
Q7: What happens if my electronic records become corrupted or otherwise damaged and are therefore inaccessible?
Q7: It is strongly recommended that dealers keep a backup of all electronic records separate from their primary source. The safety and security of electronic records is the dealer’s responsibility, just as with paper-based records.
Q8: What formats are acceptable for electronic records?
A8: Electronic records should be created and kept in a format that meets the requirements to be easily printed if requested by inspectors, consumers, or others with the right to access the material (e.g., PDF). PDFs can be either scanned copies or documents created initially in digital form. The documents must also be of a resolution and image quality sufficient to ensure that the content is both readable and understandable.
Q9: Who do I call if I still have questions?
A9: You can contact Dealer Support by phone at 1-800-943-6002, ext. 4 or via email at email@example.com.
The Dealer Support team is available to assist dealers in achieving and maintaining
compliance with the MVDA and Code of Ethics. Registrants who wish to contact Dealer
Support can reach the team at the phone number below and leave a message.
Messages are returned in priority sequence.