Better Financial Protections for Vulnerable Consumers
Beginning on January 1, 2018:
- The cap on the cost of borrowing for payday loans will be reduced to $15 per $100 borrowed from the current level of $18.
- Ontario municipalities will be allowed to restrict the areas in which payday loan shops open and the number that can operate in a given area.
Additional protections for consumers will come into effect on July 1, 2018, including:
- The maximum fees for cashing government-issued cheques will be capped at $2 plus 1 per cent of the face value of the cheque, or $10; whichever is less. There is currently no cap on cheque-cashing fees.
- Lenders will only be able to lend up to 50 per cent of a borrower’s net pay and would have to give payday loan borrowers the option of an extended payment plan if they take out three or more loans in a 63 day period.
Protecting consumers is part of Ontario’s plan to create fairness and opportunity during this period of rapid economic change. The plan includes a higher minimum wage and better working conditions, free tuition for hundreds of thousands of students, easier access to affordable child care, and free prescription drugs for everyone under 25 through the biggest expansion of medicare in a generation.
“This is another step that the government has taken to help protect Ontario consumers. We also know this is an important issue in cities like Ottawa, so in addition to new province-wide rules, we’re happy to give municipalities new tools to reflect local priorities.”
Ottawa-Vanier MPP Nathalie Des Rosiers on behalf of Government and Consumer Services Minister Tracy MacCharles
“Unfortunately, many of these organizations’ customers are some of the most financially vulnerable. We’re trying to better educate people so they don’t actually need these very high-cost services. But for those who still need them, there’s no question that the government’s changes will help.”