B.C. to enact payday loan law; Other provinces already have rules to stymie unethical lenders
- PUBLICATION: The Vancouver Province
- SECTION: News
- SOURCE: The Province
- DATE: Tuesday, August 5, 2008
A Nova Scotia ruling that caps payday lending rates is expected to be followed later this year by a similar B.C. move.
The Nova Scotia Utility and Review Board decision last week caps the maximum payday lending rate at $31 per $100 borrowed.
Each province can set its own rate. Manitoba recently set its at $17 per $100. The average cap is $25 per $100.
B.C. is currently unregulated but is moving toward setting a rate and has been holding public forums on the issue. The last of these forums is slated for September in Victoria.
Stan Keyes, president of the Ontario-based Canadian Payday Loan Association, said he's hopeful Victoria will come up with a cap that is fair to both consumers and the industry.
"Payday loan products are an important form of credit in demand by tens of thousands of people in B.C.," Keyes, a former federal Liberal MP, said from Hamilton.
"The right thing to do is legislate consumer protection measures and regulate a maximum price for borrowing so the industry can be competitive.
"Consumers should be protected against unsavoury lenders and bad business practices and receive the product at a reasonable price."
In April 2007, Solicitor-General John Les tabled legislation requiring payday lenders to get a licence, provide full disclosure of the terms and conditions of loans and stop abusive practices like rollovers which can cause annual borrowing costs to skyrocket.
Les said at the time that he was concerned by inappropriate business practices such as those requiring people to sign over their cars when they take out a loan and then facing loss of the car for a minor transgression like a payment being one day late.
The Public Utilities Board will regulate the industry in B.C.
Nationwide, the industry was estimated to be lending about $1 billion annually to two million Canadians in 2006.
Payday loans offer short-term, relatively small loans to people -- typically those who don't have credit -- and charge interest rates much higher than the banks.