Sarah Stoodley, minister of digital government and Service N.L., says new regulations for high-interest credit lenders in Newfoundland and Labrador are coming in June. (Darryl Murphy/CBC)
Correction: A previous version of this story said upcoming legislation on high-credit lenders included businesses that offer payday loans. In fact, the new legislation doesn't cover payday lenders, who were covered by legislation enacted in 2019.
The Newfoundland and Labrador government is set to introduce regulations for high-interest credit lenders, such as those who offer financing for rent-to-own home furnishings, renovations or vehicles.
Digital Government and Service N.L. Minister Sarah Stoodley said in a recent interview the province will become the fifth in Canada to implement such regulations, which will affect lenders who offer loans at between 27 and 35 per cent interest — which she called a "criminal interest rate."
"We're going to have strict disclosure requirements. You know, allow people to have a cooling-off period. People can't be [incentivized] with a gift to entice them into a high-interest loan, for example," she told CBC News.
Alberta, British Columbia, Manitoba and Quebec have similar regulations, which detail practices that will become prohibited in June, like outlawing automatic deductions from a borrower's bank account and prohibiting lenders from contacting friends, families or employers in attempts to collect payment.
Stoodley said the regulations also aim to improve transparency, by giving borrowers the option to change their mind within four business days — up from two days — with no penalties.
"We want to make sure that if someone is entering into an agreement around a high-cost credit product, whether a loan or kind of a rent- [or] lease-to-own furniture arrangement, that it's really clear up front what all the terms, all the fees, all the interest rates, what the final price is going to be," Stoodley said.
"Companies selling these high-interest products have to make that really clear, of actually how much you're paying."
Stoodley said the regulations will likely be enforced through a complaint system but the department could also investigate lenders and revoke licences if necessary.