Notification of fee changes for payday lenders (2017-2020)

Consumer Protection BC is an independent, self-funded, not-for-profit organization. Government has tasked us with regulating and licensing your sector. We have the legal authority to set your licensing and other fees and charges. In doing so, we are required by law to recover our costs, to consult with you and to provide at least ninety (90) days’ notice prior to changing or introducing new fees.

What is happening?                                                                                   

We are notifying you that the licensing fees and other charges for 2017-2020 are changing. Our Board of Directors has approved the following fee changes that will take effect November 1, 2017.

* For more information about changes to the structure of subsequent licence renewals (starting in 2018), please read the information below.

For a full listing of all fee changes and other charges for your sector, please review the 2017 fee schedule.

Why are fees changing?

Your licensing fees pay for the direct costs of regulating your sector, such as licensing, compliance inspections, complaint handling and enforcement activities, as well as indirect costs like IT, finance and accounting, office rent, etc. Every effort is made to control and maintain the cost of regulating your sector; however, some increases are unavoidable. In some cases, cost increases are consistent with inflation, in other cases, increases are based on specific and unique factors related to a sector (for example, changes to the law that result in new regulatory requirements).

The payday lending sector has changed in recent years. Since 2015, there has been a decrease in the total number of payday licensees. However, our fixed costs and the regulatory scope for your industry has not changed – the same activities and functions are required to regulate your sector. Therefore, to recover our costs, a significant increase in the fee to renew a 2017 licence is required. Beyond 2017, there will be a 2% increase in both 2018 and 2019. These fee changes assume that the number of licensees in BC will stabilize going forward. If there are any major fluctuations in our costs to regulate your sector or our licensing revenues for your sector from 2017 to 2020, we may need to make additional fee adjustments. Under such a scenario, we would consult with you prior to making any changes.

You will also notice a new structure for licence renewal fees, effective January 1, 2018 (not for November 1, 2017, renewals). You will pay a lower fee if you renew your licence at least two (2) weeks before it expires. This means you will pay less if you renew your licence at least two weeks before October 31, starting with 2018 licence renewals.

Additionally, we will no longer be charging late fees. If you don’t renew your licence by its expiry date (October 31), you will need to submit a new licence application, which costs more money.

The purpose of these changes is to encourage you – our licensed businesses – to renew your licence before its expiry date. This will create efficiencies when we process licence renewals and will benefit you, as a licensee.

If you want to learn more about the fee review process to date, please read the fee review consultation document.

What did we hear from you?

We heard from 26% of licensees on our e-mailing list. Our goals for the consultation were to make licensees aware of pending licencing fee changes and to solicit feedback on those changes and our process. Of those licensees who responded to our survey, 94% indicated they understood that we were proposing to change licensing fees and other charges. Further, 88% of respondents indicated they understand how we use their fees to regulate your sector.

The emergent themes from the feedback we received can be summarized as follows:

1. Concern regarding the increase in the cost of a principal location licence. Some lenders expressed a preference for the increase in the cost for principal licences to be offset somewhat by a larger increase for the cost of a branch location licence.
2. Confusion about the relationship between our costs to regulate your sector and our revenues from licensing fees (revenues have been decreasing since 2015).
3. Frustration with the combined impact of the recent reduction to the maximum allowable cost of borrowing (which took effect January 1, 2017), and increasing licensing fees.

We would like to respond to the survey feedback summarized in the trends above:

1. The larger principal location licensing fee increase has been designed to create additional stability in licensing revenues. Principal location licence numbers have proven to be more stable than branch location licence numbers.
2. While the number of licensees has decreased in recent years, the regulatory scope has not. The same activities and functions are required to regulate your sector. As a result, costs have remained consistent year-over-year – resulting in a need to increase licensing fees for your sector.
3. The process to set licensing fees and other charges occurs independently from government’s policymaking process. We review our fees at regular intervals, approximately every 3 years. We can appreciate that the timing may not be ideal for licensees this time around; however, fee increases are required for us to meet our cost recovery mandate.