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British Columbia Legislation
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Up until 2006, payday loans were nominally illegal in Canada under the usury laws, however large lenders have been operating since at least 1982. After 2006, the federal government delegated regulation of payday loans in Canada to the provinces, provided the province laid out an acceptable regulatory regime.
In November 1, 2009 British Columbia's regulations for payday loans came into effect, fulfilling the requirements of the federal usury law's exemption for payday loans. While the legislation is relatively long, most of it consists of things pertaining to the mechanics of regulation and enforcement such as specific dimensions for signage, duties of the registrar, and inspection timelines. The overall structure was heavily influenced by Ontario's regulatory regime which went into effect first. The main effects of that legislation that affect borrowers directly are:
- maximum interest of 23% of the principal
- maximum of 30% APR interest on defaulted loans
- maximum of 30% in total interest charges, including penalties
- maximum penalty of $20 for a dishonoured payment
- maximum loan amount of 50% of the borrower's expected paycheque
- no rollovers
- only one loan allowed at a time
- loans may be cancelled without fee during a two day grace period
- after two loans within 62 days, the third loan must be split into 3 payments
- clear disclosure of all fees
On Sept 1, 2018, the BC government further reduced the maximum interest rate charged to 15%, keeping pace with Alberta's rate.
Enforcement of the legislation is carried out by Consumer Protection BC (formerly the Business Practices and Consumer Protection Authority). This is accomplished through mandatory licensing of all lenders, coupled with annual inspections. Enforcement has been particularly vigorous in the case of Cash Store Financial, but they have also engaged in minor actions against other lenders.
Resources for payday loans in British Columbia: