Stronger protections and safeguards to make high-cost credit products more affordable and to better inform people about borrowing money were announced Tuesday by Mike Farnworth, minister of public safety and solicitor general, as part of B.C.’s Consumer Financial Protection Action Plan. (Wikimedia Commons)

Province proposes tougher rules for high-cost loans to help people out of debt cycles

New regulatory framework limits fees, protects consumers

The most financially vulnerable people in B.C. will see new protections put in place to improve affordability in the province, the Minister of Public Safety and Solicitor General announced Tuesday.

Living paycheque to paycheque is a reality for many British Columbians, with high-cost loans from alternative lenders often the only choice when faced with a financial emergency.

In 2016, more than 160,000 British Columbians borrowed more than $369 million in payday loans, or approximately $460 per day on average. A Financial Consumer Agency of Canada report found that the number of Canadians using payday loans more than doubled from 2009 to 2014 – from 1.9 per cent to 4.3 per cent.

RELATED: 2-year investigations nets $900,000 in refunds for payday loan customers

Turning to high-cost loans or other products – with terms and conditions that may be more than borrowers can afford – can leave them trapped in an endless cycle of debt payments, moving them further into poverty.

Stronger protections and safeguards to make high-cost credit products more affordable and to better inform people about borrowing money were announced Tuesday by Mike Farnworth, minister of public safety and solicitor general, as part of B.C.’s Consumer Financial Protection Action Plan.

Proposed amendments to the Business Practices and Consumer Protection Act include setting limits on the total cost of borrowing; prohibiting certain fees and charges; and protecting people from terms and conditions that are unfair.

It will also require businesses that provide high-cost credit products to be licensed by Consumer Protection BC and enables Consumer Protection BC to enforce the amendments and future regulations. Consumer Protection BC will also administer a new consumer financial education fund to enhance consumer financial education throughout the province.

RELATED: B.C. introducing stricter payday-lending law

Consumers will get added protection through the creation of borrowers’ rights and remedies, and protection against potentially harmful and expensive “hard sell” options and enticements to enter into high-cost credit product agreements.

The changes will also restrict the use of borrowers’ personal information.

The proposed changes to the act, if passed, build on previous changes, which introduced tougher rules on payday loans and cheque-cashing fees.

Before 2009, borrowers paid whatever the lender charged – as much as $30 per $100. In 2009, the province implemented regulations that capped the fee at $23 for every $100 borrowed. That number dropped to $17 in 2017 – making it the second-lowest rate in Canada – and further to $15 in 2018.

The new changes aim to assist people out of the debt cycle and make life more affordable for people in B.C., according to the announcement.

RELATED: New B.C. regulations on payday loans don’t address real issues: advocates

Resources:

Borrowing Money website: gov.bc.ca/borrowing-money

Consumer Protection BC: consumerprotectionbc.ca


 

keri.coles@blackpress.ca

Follow us on Instagram
Like us on Facebook and follow us on Twitter.

Just Posted

Parmedics union raises alarm over spike in out-of-service ambulances

Staffing shortages affecting service levels in Kootenays

School threat reported; student may face charges

DTSS back to “business as usual” after online threat by student

Valley Stars on Ice

Figure skating show this Sunday, March 17th

Rite to Ride seeks to train riders in mountain presence

Devin Publicover has launched a new foundation in Invermere

Five highlights in the 2019 federal budget

Latest budget includes a sprinkling of money for voters across a wide spectrum

Dutch police question new suspect in deadly tram shooting

Police are looking for additional suspects in the shooting

Starbucks to test recyclable cups, redesign stores in B.C., U.S. cities

The company also said it plans to redesign its stores as it adapts to increasing mobile pick-up and delivery orders

In pre-election budget, Liberals boost infrastructure cash to cities, broadband

The budget document says the Liberals have approved more than 33,000 projects, worth about $19.9 billion in federal financing

‘That’s a load of crap’: Dog poop conspiracy spreads in White Rock

Allegation picked up steam through a Facebook page run by a city councillor

Facebook to overhaul ad targeting to prevent discrimination

The company is also paying about $5 million to cover plaintiffs’ legal fees and other costs

B.C. mosque part of open-house effort launched in wake of New Zealand shootings

The ‘Visit a Mosque’ campaign aims to combat Islamophobia

Explosives unit brought in after suspicious boxes left at B.C. RCMP detachment

Nanaimo RCMP issues all clear after packages were found on lawn earlier in the day

2019 BUDGET: As deficit grows, feds spend on job retraining, home incentives

Stronger economy last year delivered unexpected revenue bump of an extra $27.8 billion over six years

Most Read