UPDATE: Edits were made to this notice on May 22, 2019, for clarification purposes.
In February 2019, the BC Government announced more measures as part of BC’s Consumer Financial Protection Action Plan. Proposed amendments to the Business Practices and Consumer Protection Act aim to strengthen protections for consumers who use alternative high-cost credit products and services.
Bill 7 (Business Practices and Consumer Protection Amendment Act) received Royal Assent on May 16, 2019.
Effective immediately, here is a high-level summary of the changes related to payday loans:
1. The definition of “payday lender” has been amended to clarify that a payday lender includes anyone who facilitates the provision of a payday loan, including a “loan broker.”
2. Payday lenders are prohibited from doing any of the following:
- Issuing a payday loan in excess of 50% of a borrower’s net pay or other net income to be received during a single pay period within the payday loan term. Even where a borrower is entitled to an extended repayment period, the amount of a payday loan that a payday lender can issue must still be based on the borrower’s earnings during one pay period.
- Requiring or requesting from a borrower any payment, whether to the payday lender or a third-party services provider, that in total exceeds a prescribed portion of the borrower’s net pay or other net income to be received during the payday loan term. (For additional context around maximum repayments, please review section 23 of the Payday Loan Regulation.)
- Selling insurance to or for a borrower, or requiring or requesting that a borrower insure a payday loan.
- Requiring, requesting or accepting consent from a borrower to use or disclose the borrower’s personal information for a purpose other than offering, arranging, providing or otherwise facilitating a payday loan. This was already a prohibition in the Regulations and is now clearly set out in the Act and will apply to high-cost credit products.
What isn’t in force yet?
The following prohibitions have not yet come into force. They will come into force at a later date by regulation along with the high-cost credit sections:
- Issuing a new payday loan or any high-cost credit product to a borrower who already has a payday loan or high-cost credit product issued by the lender.
- Issuing, before a prescribed period of time has elapsed, a new payday loan or any high-cost credit product to a borrower who has repaid a payday loan or high-cost credit product to the lender.
We will continue to keep you informed about changes to the law and we will also be updating the business and consumer information our website over the next few weeks. To check the status of a Consumer Protection BC licensed business, to read a backgrounder on the regulation of the sector in BC, understand our monetary penalty policy and procedures and read other information for regulated businesses and the public, please explore www.consumerprotectionbc.ca.
About Consumer Protection BC:
Consumer Protection BC is the regulator of a variety of sectors and specific consumer transactions in the province. Our mandate is to license and inspect our regulated businesses, respond to consumer inquiries, investigate alleged violations of consumer protection laws, classify all general release motion pictures and provide information and referrals to consumers.
For more information about our organization, to read our recent enforcement actions, and to learn about our inspection and complaint-handling processes, please visit our corporate website at www.consumerprotectionbc.ca. You can also follow us on Twitter @ConsumerProBC, like us on Facebook, follow us on Instagram and read our blog for valuable consumer tips and resources.