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High-cost credit products framework

New provincial legislation is coming into force to regulate lenders of high-cost credit products. The changes, which will take effect on May 1, 2022, will:

  • establish a new framework to license and regulate lenders of high-cost credit products, such as high-interest instalment loans over 32% APR and lines of credit over a 32% annual interest rate;
  • prescribe key aspects of the new high-cost credit framework, such as definitions, licence application fees and exemptions;
  • ensure transparency by requiring high-cost credit agreements to disclose key terms and conditions, how fees are calculated and the total cost of borrowing;
  • set clear and consistent rules for high-cost credit grantors, such as prohibitions on hidden fees, loan enticements and use of the borrower’s personal information for marketing purposes;
  • establish borrower rights and remedies, including allowing one full business day for a borrower to reconsider and cancel a high-cost credit product without penalty;
  • provide enforcement and compliance tools to ensure the rules are followed;
  • create the consumer financial education fund, which will be a new fund dedicated to providing financial literacy for British Columbians and increasing compliance with financial consumer protections 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 annual fees payable to Consumer Protection BC.

As the Province’s consumer protection authority, Consumer Protection BC will administer the new framework and consumer financial education fund. Consumer Protection BC has a mandate for regulating designated sectors and delivering consumer education. It has an escalating model for enforcement that ensures businesses operate in compliance with consumer protection laws in the province.

Companies that provide high-interest financial services were consulted on the proposed framework and the impact it would have on business practices. The legislation and regulations coming into force can be viewed on the BC Laws website.