Biz Briefs

Published November 2, 2009

BC: New rules governing payday loans in effect

By CO Staff

Consumers will be protected from abusive lending practices of payday lenders as new regulations take effect.

A payday loan is an unsecured loan less than $1,500 that must be paid back in full within 62 days. The borrower provides a post-dated cheque or pre-authorized debit form to repay the whole loan at the end of the term, usually the next payday. These loans are covered under B.C.'s Business Practices and Consumer Protection (Payday Loans) Amendment Act and the Payday Loans regulations.

The new rules, which came into effect on November 1, 2009, place limits on the fees and interest rates that can be charged by payday lenders.

Lenders, including including phone and Internet lenders, are now prohibited from:

  • Lending more than 50 per cent of a borrower's take-home pay or requiring repayment before the borrower's next payday.
  • Charging more than 23 per cent of the amount borrowed in interest and fees.
  • Requesting an assignment of wages, or collecting from a borrower's employer.
  • Using practices that unreasonably increase the borrower's debt load, including rollovers that require borrowers to pay significant extra fees for extending the time to pay a loan.
  • Operating unless licensed by Consumer Protection B.C.

Borrowers also now have the right to cancel a payday loan by the end of the following day without charge by returning the money borrowed.

Payday lenders must display rates and fees, and Internet and phone lenders must make rates and fees known to borrowers.

Compliance and enforcement will be administered by Consumer Protection BC, an arm's length not-for- profit organization previously knwon as the Business Practices and Consumer Protection Authority.

More information for borrowers and lenders is available at

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