The BC government has announced new rules to cover payday-lending practices, and to protect people from excessive fees when cashing BC Employment and Assistance cheques.
Solicitor General Mike Farnworth says limits on fees for cheque cashing, and high-cost loans, will go into effect on Sept. 1, that will lower the maximum fee to $15…from $17….for every $100 borrowed, matching the lowest rate in Canada.
The province is also 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, a change that 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,” says 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.”
More than 160,000 British Columbians used payday lenders (approximately 4% of the population over 18 years of age) in 2016.
In 2016, British Columbians borrowed more than $369 million, and took out nearly 805,000 payday loans, with the average payday loan at $460.
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.