New Payday Loan Regulations Enhance the Province’s Consumer Protection Regime
New regulations for the Newfoundland and Labrador payday loan industry came into effect on April 1, 2019. These regulations will ensure that payday lenders—anyone who loans $1,500 or less for up to 62 days—act responsibly by setting borrowing limits, increasing awareness, and providing borrowers enhanced remedies against rogue lenders.
The regulations are far-reaching. Payday lenders will now have to be aware of a long list of prohibited practices before entering into a loan agreement. Among many other prohibitions, lenders may not: issue multiple loans to one borrower; request payment from the borrower before it is due under the agreement; charge more than $21 for every $100 lent; or require security in personal or real property. The new regulations also require that payday lenders acquire a licence from the provincial government. In order to receive a license, lenders must provide the Director of Consumer Protection and Business Practices a copy of their standard payday loan agreement, their rate structure for a payday loan, and their cancelation form.
Payday loans provide an important service to those who have difficulty accessing credit through traditional financial institutions. Those who avail of them are financially vulnerable. The new regulations are a welcome addition to the province’s consumer protection regime.
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