Regulation - LGIC

Towing and Storage Safety and Enforcement Act Regulations

Regulation Number(s):
O. Reg. 417/22
O. Reg. 419/15
O. Reg. 174/22
O. Reg. 199/07
O. Reg. 587
Instrument Type:
Regulation - LGIC
Bill or Act:
Towing and Storage Safety and Enforcement Act and Regulation 417/22; Municipal Act; City of Toronto Act and Highway Traffic Act Regulations (587, 199/07, 419/15 and 174/22)
Summary of Proposal:
Tow operators provide an essential service on Ontario's roads. Each day, vehicles are towed for breakdowns, illegal parking, or motor vehicle collisions.The Towing and Storage Safety and Enforcement Act (TSSEA) establishes a provincial oversight framework for the towing and vehicle storage sector. The Act requires tow operators, tow truck drivers, and vehicle storage operators to have a provincial certificate to operate.

Twenty municipalities currently have bylaws that create licencing regimes for the towing and vehicle storage sector. The provincial framework under TSSEA is intended to replace these municipal regimes so operators and tow truck drivers only have to comply with one regime.To implement TSSEA, the Ministry of Transportation (MTO) is proposing amendments to TSSEA to clarify definitions, terminology, and authority, and proposing consequential amendments to the Municipal Act and City of Toronto Act to remove municipal authority to licence the sector.

MTO is seeking feedback on additional regulations under TSSEA that will,if approved:
• Set out customer protection standards, including consent, invoices, and ensuring rates are charged in accordance with rate schedules
• Set out industry standards, including professional conduct, record keeping and notification procedures
• Specify how TSSEA will be overseen
• Set out certificate fees of $575 per year for a tow operator certificate, $575 per year for a vehicle storage operator certificate, and $195 for three years for a tow truck driver certificate.For certificate applications between July 1, 2023 and July 1, 2024, MTO anticipates there will be no fee

Requirements for the sector are being rolled out in three phases, with the first phase complete. The additional regulations that are the subject of this posting comprise phases 2 and 3.
• Phase 1 - effective January 1, 2023: Tow operators and tow truck drivers must adhere to safety requirements that apply to other commercial motor vehicles.
• Phase 2 - effective July 1, 2023: Tow operators, tow truck drivers, and vehicle storage operators can start applying for a certificate required to operate in the sector.Applicants will be required to pay a fee as shown above.Entities that provide more than one of the regulated services will be required to hold a separate certificate for each service.MTO will be authorized to refuse, cancel, or suspend a certificate under the TSSEA for non-compliance.
• Phase 3 - effective January 1, 2024: Modernized customer protection requirements and standards of practice for the sector will come into effect.
In June 2020, in response to growing violence, corruption and criminal activity in the towing industry, the province announced the establishment of a task force to develop a comprehensive oversight regime.The task force identified the following objectives for a new framework:
1. Promote road user and tow operator safety to prevent deaths and injuries on Ontario's roads
2. Improve customer protections to ensure drivers are fairly treated
3. Create a level playing field with clear requirements that allow legitimate operators to prosper
4. Enhance intelligence gathering and enforcement and take action against unethical actors
5. Reduce crime and fraud throughout the towing cycle

Resulting from the task force's work, the government introduced TSSEA.The Act received Royal Assent on June 3, 2021.A first set of regulations under TSSEA come into effect July 1, 2023.
Analysis of Regulatory Impact:
Ongoing issues plague the towing and storage sectors due to a subset of nefarious actors who engage in insurance fraud, inflate invoices, or threaten and intimidate customers. There have been incidents of crime, including arson, assault, and homicide. Tow operators have also been found stunt driving and driving on highway shoulders, posing significant road safety risks for Ontario road users. Combined, these issues have damaged the sector's reputation and undermined market competitiveness.

MTO has heard that, without intervention, these issues might lead to:
• Tow operators going out of business due to an uncompetitive market, difficulty attracting new talent, and potentially being bought by nefarious actors in the sector
• Nefarious actors growing in number and expanding across the province
• Escalation of violence
• Rising costs for customers and insurers

To address these challenges, the TSSEA received Royal Assent on June 3, 2021. MTO has proposed a series of regulations under the TSSEA and the Highway Traffic Act (HTA) to:
• Remove most tow operator exemptions from existing commercial vehicle equipment and inspection requirements effect on January 1, 2023.
• Identify certificate requirements and the process to obtain and maintain a certificate (for example, requiring background checks and driver training). These were filed in April 2022 and will come into effect on July 1, 2023.
• Set out industry and customer protection standards, including procedures for consent forms, notification, invoices, ensuring rates are charged in accordance with rate schedules, and record keeping requirements. These regulations are the subject of this posting and are anticipated to come into effect on January 1, 2024.

Anticipated Costs
The proposed regulations under the TSSEA and the HTA are estimated to result in additional annual average present value compliance costs for the sector of $2.76 million, of which $1.42 million are administrative costs.

These costs result from certificate fees, training and education, vehicle inspections, and the time required to complete the application process, keep records, notify MTO, and cooperate with inspections.

Anticipated Benefits
The proposed regulations are expected to significantly reduce fraud and overbilling in the sector, improve competition, improve road safety, increase customer confidence, reduce the potential for vehicles being held unlawfully to inflate storage charges, and reduce intimidation, violence, and crime, among other benefits. The annual average present value of these benefits is estimated at approximately $12.52 million.

MTO used all currently available data sources to estimate this value. MTO is continuing to engage stakeholders to help further identify the extent of cost savings and fraud reduction that could be achieved through the proposal.

All cost and benefit estimates are preliminary and subject to change as MTO refines its analysis and receives additional input.
Further Information:
Proposal Number:
Posting Date:
April 4, 2023
Comments Due Date:
May 19, 2023
Contact Address:
777 Bay Street, 30th Floor
Toronto ON
M7A 2J8