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The Manitoba legislature has passed amendments that will require payday loan companies to operate within a comprehensive regulatory framework, Finance Minister Greg Selinger said today. 

 

“We want to ensure that borrowers are protected against exorbitant fees and abusive industry practices,” said Selinger. “We now look forward to the federal government passing amendments to the Criminal Code that will allow us to regulate the charges associated with the industry.”

 

The provincial legislation:

·         Requires the company to be licensed and bonded and that borrowers receive warnings about the high cost of loans. The maximum cost of credit that lenders could charge for payday loans will be set by an order made by the Public Utilities Board (PUB).

·         Prohibits additional fees when loans are renewed, extended or replaced by new loans unless these additional fees are authorized by the PUB.

·         Prohibits the practice of signing over future wages and title loans.

·         Gives the right to cancel a loan without penalty within 48 hours.

·         Gives the Manitoba Consumers’ Bureau the right to access licensed premises to inspect the operations and make copies of records. If there is evidence that payday loans are being offered through unlicensed premises, the Consumers’ Bureau will also have the right to access and inspect those operations.

 

Under the Constitution, the federal government has responsibility for interest. Section 347 of the Criminal Code establishes that interest rates over 60 per cent are criminal. Interest and administrative charges typical for small-sum short-term loans provided by payday lenders generally exceed this amount. 

 

When federal amendments to the Criminal Code are in place, public hearings will be held by the PUB to allow consumers, community groups and business to make suggestions about the fees. PUB orders setting fees to be charged for payday loans would follow the hearings.

 

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