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New Rules Would Add Protections for Consumers Using High-interest Loans

Proposed rules would require businesses offering high-cost credit products such as high-cost lines of credit, loans or payday loan-like products to treat consumers fairly so they fully understand the total cost of the loan, Tourism, Culture, Heritage, Sport and Consumer Protection Minister Ron Lemieux said today.

“We want to ensure that consumers who are getting a loan or line of credit are being treated fairly,” said Minister Lemieux.  “These new rules will ensure consumers have complete information about their borrowing including the full cost and payback period.”

Under the proposed rules, any company offering high-cost credit would be required to:

• display clear signage explaining the costs;
• make detailed disclosures about costs or fees before an agreement for credit is signed;
• give the borrower reasonable time to review the disclosure information and the agreement and provide a copy of the completed agreement to the borrower at no cost;
• not charge a fee or penalty for early repayment; and
• be licensed and contribute to the Financial Literacy Fund.

Manitoba’s Consumer Protection Office will monitor and inspect businesses providing high-cost credit to ensure they are following the new rules as well as the rules around the maximum interest charges set out in the Criminal Code of Canada, said the minister.

“This is a part of our commitment to ensure Manitoba consumers are treated fairly and are protected against high fees and practices that contribute to high consumer debt,” he said.  “We introduced the first payday loan protections in Canada in 2010 and, more recently, we introduced fair rules for cellphone contracts, debt settlement agency fees and car repair bills, and we’re now pleased to be introducing these new, stronger protections."

The Public Utilities Board (PUB) recently completed a review of payday loans and heard from a variety of presenters including Winnipeg Harvest, the Canadian Payday Loan Association and the Consumers’ Association of Canada (Manitoba).  Participants at the public hearings supported the idea of regulating high-cost credit products, Minister Lemieux noted.