Amendments to the Consumer Protection and Business Practices Act that establish a regulatory framework and rules for high-cost credit lenders operating in Newfoundland and Labrador, came into effect on Saturday, June 1.

The purpose of the new rules is to better protect consumers who may need to use high-cost credit services to take out a loan.

This makes Newfoundland and Labrador the first Atlantic province to implement a regulatory regime specific to high-cost credit lenders.

The new rules include prohibitive practices for high-cost credit lenders, as well as specific guidelines that these lenders are required to follow in order to enter into a credit agreement with a consumer. A loan with an interest rate at or above the Bank of Canada rate, plus 22 per cent, is considered a high-cost credit product in Newfoundland and Labrador under the new rules. This is tied with Quebec for the lowest threshold in the country.

High-cost credit lending services are distinct from services provided by banks, credit unions and payday lenders, and offer installment loans at high interest rates. The cost of borrowing for a consumer may include additional fees and compounding interest. These financing arrangements may be used for various purposes, including lease-to-own home furnishings, renovations, or vehicle purchases.

Information on high-cost credit licensing is available here.

Since April 1, 2019, Newfoundland and Labrador has been regulating payday loans. Payday loans are for small amounts of less than $1,500 with payment terms under 62 days. The maximum cost of borrowing for payday loans in this province is $14 per $100 loaned, which is the lowest in the country.

Information on payday lender licensing is available here.

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