According to the usury laws, payday loans in Canada were nominally illegal up until 2006. However, large lending companies have been operating since 1982. After 2006, the federal government assigned short-term loan regulation to the provinces, provided the province laid out an admissible regulatory regime. Since 2008 usury practices in Canada were place under close scrutiny and the Canadian Legislature passed certain regulations regarding payday lending practices. They put caps on fees and interest rates that can be charged by the lenders in Canada.
Later the regulation of payday loan fees and rates spread over the provinces.
According to the applicable law performed by the Saskatchewan Party government in September 29, 2011, payday lenders in Saskatchewan can’t charge over 23% of the principle loan balance, including interest rates and fees. That means that they can’t charge more than $23 per $100 loaned. Most lenders operating in the province provide charges on a descending scale, starting with 17% of interest on the first $500 borrowed, 15% on the next and 6% on loans of $1,000 and over. Fees vary from one establishment to another with no interest rates or fees over 23% of the total loan balance. And the lenders are prohibited from taking any charges for the loan renewal or extension.
There are the other important points performed in the legislation governing payday loans in the province:
- clear disclosure of all interest rates and fees
- maximum amount of loan of 50% of the borrower’s net pay during the term of the loan
- just one loan allowed at a time
- loans may be cancelled with no fee during a two day grace period
- maximum penalty of $50 for a dishonored payment
- no rollovers
- lenders are prohibited to charge fees to prepay the loan before its due date
- lenders must follow The Collection Agents Act
- lenders may not require future wages to be signed over
Saskatchewan short-term loan lenders follow an efficient licensing system requiring every lender to take a separate license at a cost of $2,000 for each lending store even if they are associated with the same company.
If payday lenders are not complying with the provided regulations, their license can be suspended or canceled. In addition, there can be an administrative penalty that can be imposed on payday lenders.
The legislation enforcement is implemented by Financial and Consumer Affairs Authority. They carry out the inspections and licensing of pay day loan lenders, as well as managing consumer complaints.