The government has approved The Payday Loans Regulations, the next step to having a fully-regulated payday loan industry in Saskatchewan.
The new regulations will prohibit harmful lending practices such as; charging additional fees beyond the allowed interest rate, charging fees to prepay the loan before its due date, and lending more than 50 percent of the borrower's net pay during the term of the loan.
In addition, lenders will now be licensed in order to ensure they are complying with the legislation. Lenders will also be required to have written agreements and provide them to the borrower as soon as an agreement is reached.
"We think we have found the appropriate balance between protection for consumers and a sustainable payday loan business," Justice Minister and Attorney General Don Morgan said.
There are currently eight payday lenders operating more than 40 outlets across Saskatchewan, including one in Weyburn.
The regulations support The Payday Loans Act, which was passed in 2007, making the regulations of payday loans a provincial responsibility. The Act will become operational once the federal government designates Saskatchewan, for the purpose of the Criminal Code, as a province with adequate consumer protection respecting payday loans. Morgan has written to his federal counterparts to request this designation.
Saskatchewan's regulations are similar to those of its partners in the New West Partnership - British Columbia and Alberta. For example, all three provinces allow payday lenders to charge a maximum of 23 percent of the amount of the loan as the total cost of borrowing.
