Maximum fee set for payday loans

The provincial government announced on Monday a series of measures to tighten rules on payday-lending practices, which includes reducing the maximum fee lenders can charge.

As of Sept. 1, payday lenders will only be able to charge $15 for every $100 borrowed, matching Ontario’s maximum fee, which was lowered back in January. B.C.’s current maximum rate sits at $17.

The new regulations would also give the borrower two business days to cancel the loan agreement, without penalty.

Using or disclosing a lender’s personal information for anything outside of a payday loan are also part of the plan to introduce tougher rules on an often-criticized loaning industry.

Payday loans are high-cost alternative financial services for those seeking $1,500 or less for a term of 62 days or less. Some companies have been criticized for practices deemed predatory on low-income individuals.

“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, in a press release.

The province will also cap the fee for cashing social assistance or disability cheques at $2, plus 1 per cent of the value of the cheque — though no greater than $10. Fees for government cheques do not have regulation.