British Columbia to strengthen consumer protection around payday loan companies
The Government of British Columbia today announced that it is amending the Consumer Protection Act to better protect people who use payday loan services.
“Many British Columbians are not immune to financial hardship and have to live paycheck to paycheque,” the BC government said in a statement. “With no choice but to seek high cost loans from other lenders, they are often faced with terms and conditions that may be higher than they can afford. “
For example, the province’s payday lenders are legally permitted to charge a rate of $ 15 for every $ 100 borrowed.
Turning to these high-cost loans or other similar products “could potentially leave the borrower trapped in a never-ending cycle of debt repayment, pushing them further into poverty.”
In response, the province said it has created a new regulatory framework to help British Columbians who use high-cost credit products “afford these types of products more easily and be better informed about borrowing money.” ‘money “.
The government said the new framework builds on previous changes, which introduced stricter rules on payday loans and check cashing fees.
To strengthen consumer protections, the proposed amendments to the Business Practices and Consumer Protection Act include rules for:
- Create the rights and remedies of borrowers;
- Set limits on the total cost of borrowing;
- Prohibit certain fees and charges;
- Restrict the use of personal information of borrowers;
- Protect people from earmarking, terms and conditions that are unfair, potentially damaging and costly “hard sell” options, as well as incentives to enter into high-cost credit product deals;
- Require companies that provide high cost credit products to be licensed by Consumer Protection BC;
- Allow Consumer Protection BC to enforce changes in law and future regulations.
In addition, the changes to the law, if passed, will build more on the changes made in 2018 to strengthen payday lending laws, with new changes that include a ban on the sale of insurance. on payday loans.
A new consumer financial education fund will be established by law to improve financial education for consumers across the province. The fund will be administered by Consumer Protection BC.