British Columbia’s High Cost Credit Rules come into effect on May 1, 2022

On May 1, 2022, British Columbia (alongside Alberta, Manitoba and Quebec) will become the fourth Canadian province to regulate high-priced credit products. After that date, additional disclosure requirements and consumer rights will apply to consumer credit products with interest rates above 32%, as well as licensing requirements for lenders offering such products.

British Columbia’s new rules for high-cost borrowing are set out in Business Practices and Consumer Protection Law (pending changes here) and the Regulation on high-priced credit products. The Rules apply to credit products for personal (non-business) use with an Annual Percentage Rate (“APR”) of 32% or more. Importantly, the high-cost credit rules do not apply in relation to a “credit sale” (sale of a product in which the purchase is financed by the seller or manufacturer of the product, or by an employee of the seller or manufacturer) or a consumer lease. In addition, the rules do not apply to business loans or “payday loans” (short-term small loan agreements that are already subject to regulation). With these exceptions, the high-cost credit rules apply to most other consumer loans or lines of credit in British Columbia when the effective interest rate (effective interest rate including additional interest-free fees) exceeds the 32% threshold.

A lender offering high credit lender products in British Columbia must be licensed, with a separate license being obtained for each location from which the high credit lender conducts business in British Columbia. The high-rate lender may not conduct its business under any name other than that stated on the license. Details of the licensing process are here. The licenses must be available by May 1st.

The new part 6.3 of the Business Practices and Consumer Protection Law sets disclosure requirements for high-priced credit products. These go beyond the requirements of other consumer credit agreements. This will likely require the creation of new or updated consumer loan documents if the APR is above 32%. Another important change is that consumers have a one-day unilateral right of withdrawal (cooling-off period) for all high-priced credit products, as well as an ongoing right of withdrawal if the lender does not provide full disclosure.

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