B.C. announces tougher rules to rein in payday lenders
Changes coming to regulations governing payday loan rates and cheque-cashing fees
The B.C. government is tightening rules around payday-lending practices, lowering the maximum amount a company can charge for a $100 loan from $17 to $15.
The new regulations, which go into effect Sept. 1, also extend the payday-loan agreement cancellation period to give a borrower two full business days to cancel a loan without penalty.
More than 160,000 British Columbians or approximately four per cent of the population over age 18, used payday lenders in 2016, according to government statistics.
Payday loan companies offer convenient but high-cost services and have been criticized for exploiting poor and unsophisticated customers.
Solicitor General Mike Farnworth said the changes will protect the province's most vulnerable citizens.
"Today, we're making changes to better protect British Columbians who use payday loans and cash social assistance and disability assistance cheques," said Farnworth,
Other changes announced include:
- Capping the fee for cashing a provincial social assistance or disability cheque at $2, plus one per cent of the value of the cheque, up to a maximum of $10.
- Prohibiting payday lenders from requiring or requesting borrower consent to use or disclose personal information for anything other than a payday loan.
- Clarifying payday lenders' data-reporting timelines to help Consumer Protection B.C. focus its education and compliance efforts.
"Today's announcement will ensure people who are receiving income and disability assistance and who rely on these services are protected from unscrupulous practices," said Shane Simpson, the minister of social development and poverty reduction.