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Bill 234, Payday Loans Accountability Act, 2020

Shaw, Sandy

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Debates

Acts affected

Original

Bill 234 Original (PDF)

EXPLANATORY

NOTE

The

Bill amends the Payday Loans Act, 2008 as follows:

1. A

limit is established on the annual interest that may be prescribed in the

regulations with respect to the cost of borrowing under a payday loan

agreement.

2. The

Borrowers’ Bill of Rights is established. It sets out principles which shall be

taken into consideration in interpreting the Act.

3. Lenders

are required to provide a copy of the Borrowers’ Bill of Rights to borrowers

before entering into a payday loan agreement. If the lender fails to do so, the

borrower can rescind the payday loan agreement.

4. The

Payday Loans Task Force is established. The Bill sets out the Task Force’s

mandate and composition. The Task Force is required to make recommendations to

the Minister periodically.

Bill 234 2020

Act to amend the Payday Loans Act, 2008 to increase accountability of lenders

and protections for borrowers

Her

Majesty, by and with the advice and consent of the Legislative Assembly of the

Province of Ontario, enacts as follows:

Subsection 1 (1) of the Payday Loans Act, 2008 is

amended by adding the following definition:

“instalment

loan” has the meaning set out in the regulations; (“prêt remboursable par

versements”)

Section 32 of the Act is amended by adding the following subsection:

Limit

on regulations, maximum interest rate

(2.1) A

regulation made under subsection (2) prescribing a limit on the cost of

borrowing shall not provide for a maximum interest rate per month that would result

in the cost of borrowing exceeding 40 per cent on an annual basis.

The Act is amended by adding the following sections after the heading

“General”:

Borrowers’

Bill of Rights

37.1 The following

principles shall be taken into consideration in interpreting this Act:

1. Borrowers

have the right to a fair and just maximum percentage on the annual interest

rate charged on payday loans and instalment loans.

2. Borrowers

have the right to access an industry that is fairly regulated.

3. Borrowers

have the right to deal online with lenders who,

i. are

licensed under this Act,

ii. maintain

at least one brick and mortar office in Ontario at which the public is invited

to deal, and

iii. operate

in compliance with this Act and the regulations.

4. Borrowers

have the right to transparent dealings with lenders, including online lenders.

Lender to provide text of Borrowers’ Bill of

Rights

37.2

(1) Before

entering into a payday loan agreement, the lender shall provide the borrower

with a copy of the Borrowers’ Bill of Rights set out in

section 37.1.

Rescission

for not providing text

(2) A

borrower may, in accordance with the regulations and within the prescribed time

after entering into a payday loan agreement, rescind the agreement, without

penalty or obligation, if the lender failed to comply with subsection (1).

Notice

of rescission

(3) Notice

of rescission shall be in writing and shall be delivered to the lender,

personally, by registered mail, by fax or by any other prescribed method, at

the lender’s address for service or to any other person designated for that

purpose in the agreement.

Effective

date of rescission

(4) The

notice of rescission is effective,

(

a) on

the day it is delivered personally;

(

b) on

the fifth day after it was mailed;

(

c) on

the day it is sent by fax, if sent before 5 p.m.;

(

d) on

the day after it was sent by fax, if sent at or after 5 p.m.; or

(

e) on

the day determined in accordance with the regulations, if sent by a prescribed

method of delivery.

Same

(5) If

the day described in clause (4) (b), (

c) or (

d) is a holiday, the notice of

rescission is effective on the next day that is not a holiday.

Obligations

on rescission

(6) Within

the prescribed period of time after the effective date of the rescission,

(

a) the

borrower shall return the advance to the lender; and

(

b) the

lender shall return any payment received from the borrower, with interest

calculated in accordance with the regulations.

The Act is amended by adding the following Part:

Part

VI.1

Payday Loans Task Force

Payday

Loans Task Force

65.1

(1) The

Payday Loans Task Force is established.

Mandate

(2) The

mandate of the Task Force is the following:

1. To

examine how payday loans are regulated in other jurisdictions.

2. To

investigate the root causes of persons needing to use payday loans and to explore

possible alternative products.

3. To

review aggregate data revealing the cost of loans, borrower use of loans

and loan defaults.

4. To

make recommendations respecting what constitutes a fair maximum percentage on

the annual interest rate charged on payday loans, instalment loans and line of

credit products.

5. To

make recommendations respecting methods of increasing transparency across the

industry.

Composition

65.2

(1) The Task

Force shall be composed of such persons as the Minister determines will make

useful contributions to the work of the Task Force, including, without

limitation, members of consumer groups representing the interests of borrowers,

persons with expertise in the role of credit and representatives of the payday

loan industry.

Appointments

(2) The

Minister shall, within 60 days after the Payday Loans Accountability

Act, 2020 receives Royal Assent, appoint at least 12 members to the Task

Force.

Remuneration

(3) The

Lieutenant Governor in Council may by regulation prescribe remuneration and

payment of expenses for the Task Force members.

Recommendations

65.3 The Task Force shall,

within one year after the day the Payday Loans Accountability

Act, 2020 receives Royal Assent, and every five years after that, make

recommendations to the Minister concerning the matters it is mandated to

consider.

Section 77 of the Act is amended by adding the following paragraphs:

2.1 governing

instalment loans;

. . . .

27.4 governing

the rescission of payday loan agreements for the purposes of

section 37.2;

Commencement

This Act comes into force on the day it receives Royal Assent.

Short

title

The

short title of this Act is the Payday Loans Accountability

Act, 2020 .

Date Bill stage Event Outcome Committee

November 25, 2020

First Reading

Vote

Carried

Debates and Progress

First Reading

November 25, 2020

Committee

Second Reading

Committee

Third Reading

Royal Assent

Acts affected - Bill 234

Most Ontario public acts are available electronically; to view copies of the Acts to be amended by this bill visit e-laws

Payday Loans Act, 2008

Legislative Assembly of Ontario

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