January 13, 2016
Manitoba Brings in New Protections for Consumers From High-Interest Loans
– – –New Legislation to Take Effect Sept. 1: Minister Lemieux
New legislation offering protection for consumers from high-cost credit products will come into force on Sept. 1, Tourism, Culture, Heritage, Sport and Consumer Protection Minister Ron Lemieux announced today.
“There are a number of new and complex high-cost credit products like instalment loans, lines of credit and ‘payday loan-like’ products that come with a high rate of interest and various fees, being offered in the marketplace,” said Minister Lemieux. “That’s why we want to make sure consumers are protected and the new rules do that by providing them with full and complete information about the true cost of their loans and their rights under the law.”
The minister said the new rules will ensure potential borrowers have the important information they need to help them make informed decisions about entering into a high-cost credit agreement, adding they also need to know about their rights once they decide to borrow.
The minister said the new legislation will regulate businesses that offer, arrange or provide high-cost credit products, regardless of whether they have a physical Manitoba location or provide their service over the Internet. Once in effect, businesses offering these products will be required to;
- be licensed with the Consumer Protection Office,
- display clear signage that explains the related costs and fees in each location where they offer high-cost credit products,
- provide potential borrowers with a detailed information disclosure document prior to an agreement being signed and give the borrower reasonable time to review the information, and
- allow borrowers to cancel their loans within 48 hours and to repay their loans without penalty.
“Having specific rules relating to high-cost credit grantors will increase protection for borrowers in significant ways,” said Gloria Desorcy, executive director, Manitoba Branch, Consumers Association of Canada. “Requiring more disclosure up-front will let a borrower know the interest rate and the terms of repayment so they can make an informed decision.”
“The new legislation supports recommendations made by the Public Utilities Board to regulate high-cost credit products. These new regulations mean consumers will have the tools they need to make well-informed decisions about complex high-cost loans,” the minister said.
The minister said that in addition to the requirement to be licensed, high-cost credit grantors will have to contribute to the Manitoba Borrowers’ Financial Literacy Fund through their licencing fees. This fund supports programs designed to educate and improve the financial literacy of borrowers and potential borrowers.
The Consumer Protection Office will continue to monitor the marketplace and ensure lenders are complying with the rules. For more information, contact the Consumer Protection Office at 204-945-3800, 1-800-782-0067 (toll-free) in Manitoba, via email at consumers@gov.mb.ca or visit its website at www.gov.mb.ca/cca/cpo.
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