Consumer Tips

Payday Loans

Payday lenders will require licences to conduct business in British Columbia as of November 1, 2009. Consumer Protection BC (CPBC) will be responsible for licensing and administering the regulations.

Similar to action being taken by other provinces in Canada, the recently introduced Payday Loan Regulation compliments changes that were made to the Business Practices and Consumer Protection Act in 2007. The Regulation requires the licensing of all payday lenders conducting business with BC consumers. This includes lenders conducting business over the internet and by telephone.

CPBC currently regulates a number of industries in BC and views the addition of the regulation of payday lenders as an enhancement to its mandate of providing consumer protection in BC. In the period leading up to the November 1st effective date of the regulation our priorities will be to:

* Fully review the new regulation in detail to determine operational requirements for licensing and enforcement and;
* Communicate and consult with various industry stakeholders;
* Provide information regarding the regulations and the licensing process on our website as soon as it is available along with regular updates.

The Payday Loan Regulation will protect consumers in a number of ways. After November 1, 2009 payday lenders must: publicly display loan rates for easy comparison to other lending institutions; provide a payday loan agreement outlining all charges, terms and conditions for every transaction; and not engage in practices that encourage continued debt and dependence or other unfair practices.

The criminal rate of interest, under section 347 of the Criminal Code, is an effective annual rate that exceeds 60 per cent on the credit advanced.

Interest, as defined by the Criminal Code, includes 'fees and charges of every kind, however they may be described or disguised,' according to the courts.

To determine the interest rate you will be paying, calculate the rate ANNUALLY.