Proposed rules would require Manitoba 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.
“We want to ensure that consumers who are getting a loan or line of credit are being treated fairly,” said Consumer Protection Minister Ron 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, Lemieux said.
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, Lemieux said.
“The new rules will go a long way to help consumers comparison shop for credit,” said GloriaDesorcy, executive director of the Manitoba Branch of the Consumer Association of Canada. “The requirement to have full and clear disclosure of the costs, terms and conditions of borrowing will help consumers make better decisions about credit.”
“We are pleased to see the province moving so quickly on the PUB recommendation to regulate these types of products,” said John Silver, executive director of Community Financial Counselling Services. “We’ve seen people get into real trouble by not realizing just how much a small loan would cost them and it can start a really serious debt spiral.”
For more information, contact the Consumer Protection Office at 1-800-782-0067 or visit the website at www.gov.mb.ca/cca /cpo.
– Compiled from a Government of Manitoba news release
