Tuesday 23 November 2021 10:00 a.m.
Financially vulnerable British Columbians who use expensive financial services to make ends meet will soon have improved protections and access to more educational resources.
“The pandemic has increased financial pressures for many British Columbians, and we want to be there to help protect people from abusive lending practices,” said Mike Farnworth, Minister of Public Safety and Solicitor General. “This new framework will provide regulatory oversight of the alternative financial services industry – before consumers borrow or take out a high cost credit loan, they need to know the risks, so that they are able to take a risk. informed decision that suits them. “
Under a new framework that will take effect on May 1, 2022, businesses that offer or facilitate high-cost credit products, such as high-interest installment loans and lines of credit above 32% of interest, will need to obtain annual licensing and regulation from consumers. BC protection. The framework is part of the 2019 amendments to the Business Practices and Consumer Protection Act.
The changes also establish new requirements for transparency and borrower protection. The rules prohibit certain fees and practices, set requirements for credit agreements, and establish the borrower’s rights and remedies. The framework aligns with the model of payday lenders, which are already regulated by the province.
A consumer financial education fund will be established by law to increase consumer financial awareness across the province. The fund, which will also come into effect on May 1, 2022, will be paid by the industry as part of its annual fee and will be administered by Consumer Protection BC.
These changes meet commitments made under the government’s 2018 Consumer Financial Protection Action Plan to strengthen consumer protection and improve affordability for BC’s most financially vulnerable people. The plan included legislation to establish new financial protections for consumers who use high-cost financial services, payday loans, and government check-cashing services.
Action plan for the financial protection of consumers:
Online resources for borrowing money:
Information on British Columbia Consumer Protection Laws – Consumer Protection BC:
An information document follows.
New provincial legislation comes into effect to regulate lenders of high cost credit products. The changes, which will come into effect on May 1, 2022:
- establish a new framework to authorize and regulate lenders of high cost credit products, such as high interest installment loans above 32% APR and lines of credit with an annual interest rate above 32%;
- prescribing key aspects of the new high-cost credit framework, such as definitions, license application fees and exemptions;
- ensure transparency by requiring that high cost credit agreements disclose key terms and conditions, how fees are calculated and the total cost of borrowing;
- establish clear and consistent rules for high-cost credit providers, such as prohibiting hidden charges, inducements to lend, and the use of borrower’s personal information for marketing purposes;
- establish the borrower’s rights and remedies, including granting a borrower a full business day to reconsider and cancel a high cost credit product without penalty;
- provide enforcement and compliance tools to ensure compliance with the rules;
- create the Consumer Financial Education Fund, which will be a new fund dedicated to financial education for British Columbians and improving compliance with financial protections for consumers in the Business Practices and Consumer Protection Act; and
- require high cost credit grantors and payday lenders to contribute to the fund as part of the annual fee payable to Consumer Protection BC.
As the provincial consumer protection authority, Consumer Protection BC will administer the new framework and the consumer financial education fund. Consumer Protection BC’s mandate is to regulate designated sectors and educate consumers. It has a phased enforcement model that ensures businesses operate in accordance with the province’s consumer protection laws.
Companies providing high interest financial services were consulted on the proposed framework and the impact it would have on business practices. The current legislation and regulations can be found on the BC Laws website.