New Regulations In Place For Pay Day Loans

Monday, March 02, 2009 12:03 PM

Victoria - The Province today announced new regulations to help protect consumers who apply and receive short-term loans from payday lenders.

Key regulatory changes include:

* The maximum charges for short-term loans will be capped at 23 per cent of the principal and that must include interest and all other fees. Some payday lenders currently charge as high as 30 per cent.

* A loan agreement between the payday lender and the borrower that sets out all charges, terms and conditions. Payday lenders must also display posters and signage showing their rates and fees.

* Borrowers will have the right to cancel the loan by the end of the following day, without paying any charges.

* Payday lenders will not be able to collect repayment on a loan directly from the borrower's employer, or get unrestricted access to the customer's bank account. They will also 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 lenders will not be able to issue a loan for more than 50 per cent of the borrower's next paycheque. Borrowers will have a mechanism 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 Counselling Society. "The B.C. government is moving in the right direction with these regulations."

The 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.

There are about 250-300 payday outlets in B.C.

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Posted on Monday, March 02, 2009 12:03 PM in News by 250 News

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Comments

Posted by: downnotout on March 2 2009 2:54 PM

23% sounds like loan sharks to me. I also heard that the banks own the payday loan places. Does the government not relys that it is the people that are on the lower end of the pay sacle that use these services the most.

Posted by: Smooth on March 2 2009 3:32 PM

downnotout

What do you propose the government does in this case:

shut these down completely?
force an even lower %?

The only answer for me is education on how to better handle your money. Is it really up to the government to infinitely protect the stupid from losing their money?

Posted by: metalmanzipit on March 2 2009 4:07 PM

So the government has to protect people from themseleves?? People who use these places on a regular bases are as dumb as a post.Who can't figure out that if they wait 4 days till payday they will have an extra 400 bucks to spend.
Just because the sign doesn't say : I'll give you a 500 bucks now if you give me $750.00 next week ... so, so, so dumb people!

Posted by: metalman on March 2 2009 5:44 PM

Smooth and zipit (?): the stupid? or the misfortunate? Or poor planners?
metalman, the original.

Posted by: Palopu on March 2 2009 5:53 PM

There isnt a big difference between those who use these payday loan outfits at 23% and the so called intelligent who use their credit cards and pay 18%. In both cases the lenders are laughing all the way to the bank.

A lot of this BS will come to an end because of the present depression that we are experiencing. People will be going broke, and as they shut down, so will the lenders, and credit card companies.

Expect a lot of bankruptcies in the next couple of years.

Posted by: furtree on March 2 2009 8:08 PM

Why did the Gordon Gamble government bring these regulations foreword.
Its a feeble attempt to try and show the masses (us) that this government stands for something. This, and trying to charge some chubby guy in Bountiful for having to many girl friends.
The truth of the matter is, those folks who use these services, and who are caught in this merry go round, will take no heed, whats so ever in this new regulations. Gordon Gamble and his friends know this. Read these regulations, they come with ready made loop holes.

Posted by: Chester on March 2 2009 10:42 PM

And we are forced to settle for 2.3% returns on our meagre savings for a whole year. What is wrong with this picture? And the government has presented us with the greatest tax savings idea since the RRSP. The Tax Free Savings Account. Whoop de doo!. $5,000 x 2.3% = $115 tax free growth over a whole year. Payday loans make 10 times this much in a week.

Posted by: kitkat on March 3 2009 1:22 AM

Palopu is right. There is no real difference between the payday loan companies and the credit card companies.Unless I'm mistaken the payday loan companies have been charging as much as 29%, (every 2 weeks) so maybe the difference will help someone who needs it.These companies represent the worst of the worst. I feel bad for the people that have been sucked into their bullsh@t.But all you people feeling holier than thou about this should check you recent credit card charges. YOU'RE ALL JUST AS BIG A BUNCH OF SUCKERS!!!

Posted by: Shellshadow on March 3 2009 7:56 AM

I just love the legalised loan sharking...