Ontario to cap payday loan fees

The Ontario government plans to limit the fees that companies can charge for "payday loans."

The Ontario government plans to limit the fees that companies can charge for "payday loans."

The cap is among new regulations introduced Monday for companies that offer high-interest, short-term loans without a credit check.

Government Services Minister Ted McMeekin said the cap on the total cost of borrowing will be set by an independent advisory board in the coming months.

If the legislation passes all payday lenders must also:

  • Be licensed by the province.
  • Provide customers with a total that includes all charges the consumer is required to pay when borrowing.
  • Contribute annually to a fund to pay for public education about payday lending.

Provincial inspectors will check whether payday loan businesses are complying with the law, and businesses that don't could face charges or licence suspensions.

The new regulations also allow borrowers to cancel agreements during a cooling-off period.

In May, the federal government passed legislation to give provinces and territories the power to regulate what payday loan companies charge and in August, new provincial rules went into effect forcing lenders to hang large posters in their stores spelling out the interest rates, brokerage fees and cheque-cashing fees charged for every $100 in loans.

With files from the Canadian Press