The provincial government is setting new rules for payday loan companies to better protect consumers.
“Our government is committed to improving the lives of New Brunswick families,” said Finance Minister Mandy Yigers. “By applying these new rules on payday loans, we make sure that no one benefits when people need financial support the most. We know that people who use a payday loan often have no other choice and do it as a last resort. What we are announcing today will result in improved safety and protection for these consumers. “
The new rules applicable to payday loan companies:
• require any person offering, offering or providing a payday loan in New Brunswick to obtain a license from the Financial and Consumer Services Commission;
• establish requirements for licensees and allow the commission to take action against unauthorized activities and those that are not in compliance with the law; and
• Help consumers by requiring payday loan companies to disclose the cost of borrowing, setting maximum rates and fees and providing a right of withdrawal for consumers.
“We congratulate the government for taking the necessary steps to regulate the payday lending industry,” said Dindo Plandif, Executive Director of the Saint John Human Development Council. “Payday loans are the most expensive personal loans on the market. These new regulations will provide important protection to consumers in the province. We look forward to providing feedback on other regulations dealing with repetitive borrowing and reporting requirements from industry. “
The regulatory structures implemented are similar to the measures applicable to the payday loan company industry across the country. After consulting with stakeholders and industry, the provincial government ensured the reasonableness of the rates charged to consumers while ensuring the viability of the industry.
“We are encouraged to see these new consumer protection measures in the province of New Brunswick,” said Johnny Panser, President of Credit Counseling Services Atlantic Canada. “Every day we see how consumers who are trying to break the cycle of payday loans are affected. Imposing a limit on costs, fees, penalties and amounts borrowed is a step in the right direction, and we will continue to provide support and advice to protect consumers. “
The Financial and Consumer Services Commission will oversee the application of these new rules, which will come into effect in January 2018.
“Our mandate is to protect consumers through regulation and awareness,” said Commission Director General Rick Solas. “Some consumers in financial difficulty are seeking short-term credit and may be exposed to abusive lending practices. We want to ensure that consumers are better informed about the true cost of these services and that they use the services of a licensed payday loan company. “
The commission’s website contains information to help industry prepare for the new rules. It also contains information to help consumers understand the issues to consider when choosing to make a loan from a payday loan company and make informed credit decisions. The commission will also publish an online directory of licensed loan companies.