The Province is starting to tighten the rules to rein in payday-lending practices, and to protect people from excessive fees when cashing BC Employment and Assistance cheques.

For some time, British Columbia’s most financially vulnerable individuals have used non-traditional lenders and credit providers, who often impose high borrowing costs and debt loads on borrowers.

“Today, we’re making changes to better protect British Columbians who use payday loans, and cash social assistance and disability assistance cheques,” said Mike Farnworth, Minister of Public Safety and Solicitor General. “We’re also looking to make further changes to protect vulnerable consumers, who use other high-cost financial services in the province.”

Limits on fees for cheque cashing, and high-cost loans, will go into effect on Sept. 1, 2018, as follows:

Strengthen payday-loans protections:

• Lowering the maximum fee to $15 from $17, for every $100 borrowed, matching the lowest rate in Canada.
• Extending the payday-loan agreement cancellation period, so a payday-loan borrower now has two full business days to cancel the loan without penalty.
• Prohibiting payday lenders from requiring, requesting or accepting consent from a borrower, to use or disclose their personal information for anything other than for arranging or providing a payday loan.
• Clarifying payday lenders’ data-reporting timelines. The receipt of more timely data will help Consumer Protection BC to focus its education and compliance efforts, and the data will help to inform government about trends and changes in the industry.

Limit fees for cashing social and disability assistance cheques:

• Capping the fee for cashing a provincial social assistance or disability cheque at $2, plus 1% of the value of the cheque, up to a maximum fee of $10. Note: this change applies to anyone in B.C. who cashes cheques.

Starting June 25, 2018, on the government’s website, the ministry is providing practical advice and information to all British Columbians, to help them make informed choices about borrowing money, and using expensive alternative financial services, like cheque-cashing services.

“Our government is working to provide opportunities to help lift people out of poverty,” said Shane Simpson, Minister of Social Development and Poverty Reduction. “Today’s announcement will ensure people, who are receiving income and disability assistance, and who rely on these services, are protected from unscrupulous practices, and have more money left in their pocket after they cash their cheque.”

These changes are part of government’s overall Consumer Financial Protection Action Plan led by Farnworth. By reducing costs to consumers, and introducing additional consumer protections, the action plan supports the Province’s goal of reducing poverty, and helps make life more affordable.

Although the actions are intended to protect the most-vulnerable consumers, the changes will benefit all British Columbians who use high-cost alternative financial services. Government will continue to consider taking steps to protect vulnerable consumers.

“We’ve been regulating the payday-lending sector for almost a decade, and we have first-hand knowledge of how it works. British Columbians are borrowing an increasing amount of money from payday lenders, and our data shows that number is approaching $400 million a year,” said Rob Gialloreto, president and CEO, Consumer Protection BC. “We support efforts of this nature by the Province, that are designed to protect vulnerable consumers who use the services of any high-cost lender.”

Advances in the protection of consumers, with more to come in the future on other high-cost alternative financial services, will strike a balance between industry and consumer needs as part of a well-regulated industry. Further research and work is underway in this policy area, including looking at other high-cost loans and cheque-cashing services, to determine what needs to be done to further strengthen consumer protections and affordability. 

As part of its public education efforts, the Province has launched a new website called Borrowing Money. This website will provide people with information to consider before taking out a loan of any kind. The content on this website will allow anyone in B.C. to become informed and educated on various credit products and services, what rights borrowers have, and where to go for assistance.

Quick Facts:

• In 2016, more than 160,000 British Columbians used payday lenders (approximately 4% of the population over 18 years of age).
• On Jan. 1, 2017, B.C. reduced the maximum permissible charge for a payday loan to $17 per $100 borrowed, down from $23.
• In 2016, British Columbians borrowed more than $369 million, and took out nearly 805,000 payday loans.
• In 2016, the average payday loan was around $460.
• Consumer Protection BC, a provincial regulator created by government, licenses certain sectors, and enforces the Province’s consumer-protection laws.

Learn More:

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

Consumer Protection BC: www.consumerprotectionbc.ca/