Overview

High-cost credit is any credit product with a rate of 32% or more.

The High-Cost Credit Regulation provides a framework for the conduct and operations of businesses that offer, arrange or enter into agreements for high-cost credit products including instalment loans, title loans, lines of credit, rent-to-own transactions or pawn loans.

The regulation is part of the Consumer Protection Act and applies to both physical and online businesses. It outlines clear rules and standards to protect consumers and ensure consistency across the industry.

Types of credit

The regulation applies to both fixed and open credit products that have an associated annual rate of 32% or more.

Fixed credit

  • Any form of credit for a set amount, such as instalment loans or auto loans where consumers make regular payments to repay a specific amount.
  • The 32% rate refers to an annual value that includes the interest rate and all mandatory fees and costs involved with the high-cost credit agreement.

Open credit

  • Any form of credit that allows the borrower to access credit on an as-needed basis and does not set a total amount to be borrowed, such as a line of credit.
  • The 32% refers to an annual interest rate, which is the base interest rate for the product.

Business licence requirements

To enhance enforcement in the marketplace, every high-cost credit lending location in the province and all online lenders must be licensed.

Yearly business licences cost $1,000. Licences for each additional business location cost $500 per year.

Licences must be displayed prominently:

  • in the licensed premises for physical locations
  • at or near the top of homepage for online businesses

Consumer protections

Supporting informed decisions

To help borrowers make informed choices and to ensure consistent practices across the industry, high-cost credit lenders must:

  • provide to borrowers key loan information in a standard format
  • disclose information about optional related products
  • provide written or electronic confirmation that optional products have been cancelled
  • provide the borrower with information about the loan details during the term of the loan

Prohibited business practices

To protect consumers from practices that may cause undue stress or violate individual privacy, high-cost credit businesses cannot:

  • mislead borrowers in loan advertisements, solicitations or negotiations
  • make empty threats or harass borrowers about outstanding loans
  • call borrowers before 7 am or after 10 pm
  • contact third parties in relation to a borrower’s debt

Timeline

The High-Cost Credit Regulation came into effect Jan. 1, 2019.