Regulation of high cost credit products to protect consumers

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UPDATE

Victoria

Tuesday 23 November 2021 10:00 a.m.

Information documents

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.

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