Financially vulnerable British Columbians who use high-cost financial services to make ends meet will soon have enhanced protections and access to more education resources.
“The pandemic has heightened financial pressures for many British Columbians, and we want to be there to help protect people from predatory 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 sign up for a high-cost credit loan they need to know the risks, so they are able to make an informed decision that is right for them.”
Under a new framework that will come into force on May 1, 2022, companies that offer or facilitate high-cost credit products, such as high-interest instalment loans and lines of credit above 32% interest, will require annual licensing and regulation by Consumer Protection BC. The framework is part of 2019 amendments to the Business Practices and Consumer Protection Act.
The changes also establish new transparency requirements and borrower protections. Rules prohibit certain fees and practices, set requirements for credit agreements and establish borrower rights and remedies. The framework aligns with the model for payday lenders, which are already regulated by the province.
A consumer financial education fund will be established under the act to enhance consumer financial awareness throughout the province. The fund, which also will come into effect May 1, 2022, will be paid for by the industry as part of their annual fees and be administered by Consumer Protection BC.
These changes fulfil commitments made as part of government’s 2018 Consumer Financial Protection Action Plan to strengthen consumer protections and improve affordability for the most financially vulnerable people in British Columbia. The plan included legislation to establish new financial protections for consumers that use high-cost financial services, payday loans and government cheque-cashing services.
Consumer Financial Protection Action Plan:
Online resources for borrowing money:
Information about B.C. consumer protection laws – Consumer Protection BC:
A backgrounder follows.