PROVINCE TO PROTECT PAYDAY LOAN CONSUMERS

VICTORIA – Legislation introduced today will protect consumers by prohibiting abusive lending practices and limiting fees and interest rates charged by payday lenders, Solicitor General John Les announced today.

“Payday lenders provide immediate small cash loans to cover emergencies, but that convenience comes at a price for the borrower – and in many cases that price is too high,” Les said. “We want to prevent borrowers from getting into a spiral of debt, while allowing this industry to recuperate its transaction costs.”

Les added that while British Columbia is introducing legislation to regulate payday lenders, the authority for the Province to do so is dependent on Ottawa making changes to the Criminal Code, which are expected to be finalized soon. The proposed federal legislation limits loans to a maximum of $1,500 for a maximum of 62 days. Once federal and provincial legislation is in place, the Province will lead consultations with consumer and industry organizations to determine fees that are reasonable for consumers, but sufficient to cover industry’s administration costs. Fees will be set by regulation.

“We are delighted to hear that government has decided to take this step to protect consumers from disreputable lenders,” said Scott Hannah, president and CEO of the Credit Counselling Society of British Columbia. “This new legislation will protect society’s most vulnerable individuals and families from unethical practices and excessive charges and penalties.”

B.C.’s Business Practices and Consumer Protection (Payday Loans) Amendment Act will prohibit lenders from:

· Practices that increase the borrower’s debt load, including rollovers that require borrowers to pay significant extra fees for extending the time to pay a loan;

· Requesting an assignment of wages, and requiring the borrower to sign documents transferring ownership of property, such as a vehicle, to the lender;

· Charging more than the regulated fee for cashing government cheques. These cheques pose little risk to the lender once the identification of the consumer and authenticity of the cheque have been established; and

Lending more than a regulated percentage of a borrower’s take-home pay.

Borrowers will also have the right to cancel a payday loan within a certain time limit by returning the money and completing a notice form, and can expect full disclosure of the terms and conditions of any loan.

Payday lenders will also require a licence, and licensing and compliance enforcement will be administered by the Business Practices and Consumer Protection Authority, a not-for-profit organization that operates at arm’s length from government.

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Media contact:	Cindy Rose Public Affairs Bureau Ministry of Public Safety and Solicitor General 250 356-6961

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