Canada: British Columbia announced new regulations capping total charges for payday loans offered in the province at $23 per $100 loaned including all interest and fees.
Additional British Columbia payday loan regulatory changes include:
A payday loan agreement between the payday lender and the payday loan borrower must be created that sets out all charges, terms and conditions.
Payday lenders must also display posters and signage showing their rates and fees.
Payday loan borrowers will have the right to cancel their payday loan by the end of the following day, without paying any fees.
Payday loan lenders will not be able to collect repayments on a payday loan directly from the borrower’s employer, or get unrestricted access to the customer’s bank account.
Payday loan lenders will not be allowed to ask for repayment of the loan before the borrower’s payday.
Payday lenders will not be able to issue more than one loan to a borrower at a time, and rolling one loan into another with new charges attached will also be prohibited.
Payday loan lenders will not be able to issue a payday loan for more than 50 per cent of the borrower’s next paycheck.
There has been significant growth in the short-term, payday loan lending industry in British Columbia in recent years. There are about 250-300 payday outlets in British Columbia.
As of Nov. 1, 2009 payday loan companies in B.C. will need to be licensed by the Business Practices and Consumer Protection Authority (BPCPA).
Payday loan borrowers will have the ability to resolve complaints outside of the courts. Furthermore, the BPCPA will have the tools to ensure industry compliance once the rules come into effect. The regulations will be reviewed in two years.
“These measures will help consumers clearly understand the costs associated with payday loans and assist those who find themselves in over their head financially as a result of repeatedly using payday loans,” said Scott Hannah of the Credit Counseling Society.
The B.C. government introduced payday loan legislation in the spring of 2007 and it was passed in the fall. The regulatory changes being announced today follow changes the Federal government made to the Criminal Code that year to allow provinces to set their own rates for payday lenders.