1 Chapter 92 of the Revised Statutes, 1989, the
Consumer Protection Act, is amended by adding
immediately after Section 12 the following Section:
18A In this Section and Sections 18B to 18U,
(a) "payday lender" means a person who offers,
arranges or provides a payday loan;
(b) "payday loan" means any advancement of money
with a principal of one thousand five hundred
dollars or less and a term of sixty-two days or less
made in exchange for a post-dated cheque, a
pre-authorized debit or a future payment of a
similar nature but not for any guarantee, suretyship,
overdraft protection or security on property and not
through a margin loan, pawnbrokering, a line of
credit or a credit card;
(c) "rollover" means the extension or renewal of
a loan that imposes additional fees or charges on
the borrower, other than interest, or the
advancement of a new payday loan to pay out an
existing payday loan, or a transaction specified in
the regulations.
18B Nothing in Sections 18A to 18U applies to a
payday loan made before the coming into force of
Sections 18A to 18U, except to the extent that it
relates to an extension or renewal made or granted
after the coming into force of Sections 18A to 18U.
18C (1) No person shall offer, arrange or provide
a payday loan from a location except under the
authority of a permit issued to the person for that
location.
(2) No payday lender shall offer, arrange or
provide a payday loan under the business name or
style that differs from the business name or style
specified in the lender's permit.
18D (1) A person may apply, in the form approved
by the Registrar, for
(a) a permit authorizing the person to offer,
arrange or provide payday loans at the location
specified in the permit; or
(b) a renewal of a permit.
(2) A person who wishes to offer, arrange or
provide payday loans at more than one location must
apply for a separate permit for each location.
(3) Before a permit is issued or renewed by the
Registrar, the applicant must pay the permit or
renewal fee specified in the regulations.
18E (1) Upon receipt of an application in the
prescribed form from an applicant who satisfies the
requirements of this Act and the regulations and any
terms or conditions stipulated by the Registrar, the
Registrar shall issue a permit to the applicant.
(2) Unless previously terminated or cancelled,
every permit issued pursuant to subsection (1)
expires one year from the end of the month in which
the permit was issued.
18F (1) A permit issued pursuant to Section 18E
is not transferable or assignable.
(2) In the event of a change in ownership of a
payday lender, the person acquiring ownership of the
payday lender must apply for a new permit.
(3) The Registrar, where the Registrar considers
it in the public interest to do so, may impose terms
or conditions on a permit at the time of issuing or
renewing the permit, or at any other time by written
notice to the permit holder.
18G (1) The Registrar may refuse to issue a
permit to an applicant if
(a) the applicant has been convicted of
(i) an offence under this Act, or
(ii) an offence under the Criminal Code
(Canada) or any other Act that, in the opinion
of the Registrar, involves a dishonest action or
intent;
(b) the applicant is an undischarged bankrupt;
(c) the applicant provides incomplete, false,
misleading or inaccurate information in support of
the application;
(d) a permit issued to the applicant
(i) under this Act, or
(ii) by an authority responsible for issuing
permits with respect to the lending of money in
any jurisdiction,
is suspended or has been cancelled, or the applicant
has applied for a renewal of such a permit and the
renewal has been refused;
(e) the applicant fails to meet any qualification
or satisfy any requirement of Sections 18A to 18U or
the regulations;
(f) the Registrar has reason to believe that the
applicant will not carry on business according to
law and with integrity and honesty; or
(g) in the Registrar's opinion, it is not in the
public interest to issue a permit to the applicant.
(2) The Registrar may refuse to issue a permit to
(a) a corporation, if a director or officer of
the corporation could be refused a permit under
subsection (1); or
(b) a partnership, if a member of the partnership
could be refused a permit under subsection(1).
(3) The Registrar shall give written reasons for
a decision to refuse to issue a permit.
18H (1) Subject to subsection (2), the Registrar
may refuse to renew or may cancel or suspend a
payday lender's permit
(a) for any reason for which the Registrar may
refuse to issue a permit under Section 18G;
(b) if the lender fails to provide information
required by the Registrar or the regulations, or
provides incomplete, false, misleading or inaccurate
information to the Registrar;
(c) if the lender contravenes or fails to comply
with this Act or the regulations; or
(d) if the lender contravenes or fails to comply
with a condition of the permit.
(2) Before refusing to renew or cancelling or
suspending a permit, the Registrar shall notify the
payday lender, in writing, that
(a) the Registrar intends to refuse to renew the
permit or to cancel or suspend it, the effective
date of the Registrar's decision and why; and
(b) the lender may, within fourteen days after
being served with the notice,
(3) The Registrar may extend the fourteen-day period
referred to in clause (b) of subsection (2).
(4) Where the payday lender does not make a
written submission or arrange for and attend a
hearing under clause (b) of subsection (2), the
Registrar may take the action stated in the notice.
(5) After considering a written submission or
holding a hearing, the Registrar may refuse to renew
the permit or may cancel or suspend the permit.
(6) A decision to cancel or suspend a payday
lender's permit made pursuant to subsection (5)
takes effect when notice of the decision is served
on the lender, or on the date specified in the
decision, whichever is later.
(7) The Registrar shall give written reasons for
a decision to refuse to renew or to cancel or
suspend a permit.
18I A payday lender shall provide, in writing and
in plain language, the following information to a
borrower:
(a) the total amount borrowed expressed as one
sum in dollars and cents, that is comprised of
(i) the sum actually received by the borrower,
and
(ii) the sum of official fees and premiums
for insurance paid by the lender at the request
of the borrower;
(b) the cost of borrowing expressed in dollars and
cents and itemized into interest and any other
charges;
(c) the interest payable as a percentage rate;
(d) the cost of borrowing as a percentage of the
total amount borrowed expressed at an annual rate;
and
(e) the total amount to be repaid;
(f) the regulated maximum rates or fees for the
cost of borrowing or any other charges applying to
payday loans as determined by the Nova Scotia
Utility and Review Board;
(g) charges payable in the event the loan is not
repaid by the due date and the allowable maximum
charges as determined by the Nova Scotia Utility and
Review Board;
(h) how a loan may be cancelled;
(i) the borrower's rights if the lender charges
amounts prohibited under Section 18J;
(j) the amount of fees and charges that can be
applied to any extension or renewal as determined by
the Nova Scotia Utility and Review Board;
(k) a copy of the loan agreement;
(l) a copy of a document signed by the borrower
stating that the borrower has received the
information set out in this Section; and
(m) such other information as prescribed in the
regulations.
18J A payday lender shall not charge
(a) any fee, rate or other charge in excess of
the maximum fees, rates or charges determined by the
Nova Scotia Utility and Review Board;
(b) any fee, charge or penalty that is not
provided for in this Act or the regulations;
(c) any amount in excess of that disclosed in
writing to the borrower;
(d) a fee for cancellation of a payday loan; and
(e) any amount not disclosed in writing to the
borrower.
18K Where a payday loan is not fully repaid on
the due date set out in the payday loan, the
borrower and the lender may negotiate an extension
or renewal of the payday loan.
18L Any procedures used by a payday lender to
collect monies due under a payday loan are subject
to this Act and the Consumer Creditors' Conduct Act.
18M A payday lender shall issue receipts for the
repayment of a payday loan and must retain such
receipts in the manner prescribed in the
regulations.
18N A payday lender shall not
(a) require security for a payday loan;
(b) require undated cheques or require post-dated
cheques for any amount exceeding the amount to repay
the payday loan by the due date including interest
and fees;
(c) issue a new payday loan to a borrower who
already has a loan with the lender;
(d) discount the principal amount of the loan by
deducting or withholding from the initial advance an
amount representing any portion of the cost of
borrowing;
(e) issue a loan in excess of a portion of the
borrower's net pay as prescribed;
(f) where a loan agreement makes provision for
instalment payments, require an instalment payment
to be in excess of a portion of the borrower's net
pay as prescribed;
(g) charge a penalty or fee for the early
repayment of a loan; or
(h) grant rollovers.
18O A payday lender shall display, in the manner
prescribed by the regulations, at the location at
which a payday loan is arranged or provided rates
and fees for payday loans.
18P (1) The borrower is not liable to pay the
lender any amount the lender is prohibited from
charging under Section 18J
(2) Where the borrower has paid an amount
referred to in subsection (1), the borrower is
entitled to a refund of all monies paid in excess of
the total amount borrowed.
(3) In the event that the loan agreement requires
the borrower to pay an amount referred to in
subsection (1), the borrower is responsible to repay
only the total amount borrowed.
(4) Where the borrower is entitled to a refund
under subsection (2), the lender shall provide the
refund immediately upon demand by the borrower or by
the Registrar.
18Q (1) A borrower may cancel a payday loan
anytime prior to the end of the business day
following the date of receipt of the initial advance
or cash card or other device enabling the borrower
to access the funds, or such longer period as
prescribed in the regulations.
(2) A borrower may cancel a payday loan at any
time if the payday lender
(a) did not advise the borrower of the borrower's
right pursuant to subsection (1); or
(b) failed to provide the borrower with the
information required to be provided to the borrower
under Section 18I.
18R (1) A borrower shall cancel a payday loan by
(a) giving written notice of the cancellation to
the payday lender; and
(b) repaying, by cash, certified cheque or money
order or in another prescribed manner, the
outstanding balance of the total amount borrowed.
(2) For the purpose of clause (b) of subsection
(1),
(a) where the initial advance was made in the
form of a cheque, a return of the unnegotiated
cheque to the payday lender is to be considered a
repayment of the initial advance; and
(b) where the initial advance was made in the
form of a cash card or other device that enabled the
borrower to access funds under the loan, returning
that card or device to the payday lender is to be
considered a repayment of the initial advance to the
extent of the cash or credit balance remaining on
the card or device.
(3) Upon the cancellation of a payday loan under
this Section, the payday lender must immediately
give the borrower a receipt for what the borrower
paid or returned to the payday lender upon
cancelling the loan.
(4) The cancellation of a payday loan under this
Section extinguishes every liability and obligation
of the borrower under, or related to, the payday
loan agreement.
(5) Notwithstanding subsection (4), in the event
that the borrower purchased loan insurance paid by
the lender at the request of the borrower, the
borrower is responsible for the pro-rated amount of
the insurance premium.
18S A payday lender shall retain the documents
prescribed in the regulations for the period of time
prescribed in the regulations.
18T (1) In this Section, "Board" means the Nova
Scotia Utility and Review Board.
(2) The Board shall, by order,
(a) fix the maximum cost of borrowing, or
establish a rate, formula or tariff for determining
the maximum cost of borrowing, that may be charged,
required or accepted in respect of a payday loan;
(b) fix the maximum amount, or establish a rate,
formula or tariff for determining the maximum
amount, that may be charged, required or accepted in
respect of the extension or renewal of a payday
loan; and
(c) fix the maximum amount, or establish a rate,
formula or tariff for determining the maximum
amount, that may be charged, required or accepted in
respect of any fee, charge or penalty that is
provided for in the regulations.
(3) The Board may, by order, fix the maximum
amount, or establish a rate, formula or tariff for
determining the maximum amount, that may be charged,
required or accepted in respect of any component of
the cost of borrowing of a payday loan.
(4) When making an order under this Section, the
Board may consider
(a) the operating expenses and revenue
requirements of payday lenders in relation to their
payday lending business;
(b) the terms and conditions of payday loans;
(c) the circumstances of, and credit options
available to, payday loan borrowers generally, and
the financial risks taken by payday lenders;
(d) the regulation of payday lenders and payday
loans in other jurisdictions;
(e) any other factor that the Board considers
relevant and in the public interest; and
(f) any data that the Board considers relevant.
(5) An order made under this Section must be one
that the Board considers just and reasonable in the
circumstances, having regard to the factors and data
considered by the Board.
(6) The Board shall review its existing orders
under this Section at least once every three years
and, after the review, the Board shall make a new
order that replaces the existing orders.
(7) Whenever the Board is satisfied that
circumstances in the payday lending industry have
changed substantially, or that new evidence has come
to its attention that may affect an existing order
made under subsection (2) or (3), the Board may
review any existing order and, after the review, the
Board shall make a new order that continues,
modifies or replaces the order that was reviewed.
(8) Before making an order under this Section,
the Board shall notify the Registrar and give public
notice and hold a public hearing in respect of the
subject matter of the order.
(9) As soon as practicable after the Board makes
an order under this Section, the Registrar shall
give written notice of the order to every payday
lender who holds a permit or whose application for a
permit is under consideration by the Registrar.
(10) The Board may make recommendations to the
Minister on matters in respect of payday loans and
payday lenders.
(11) The Utility and Review Board Act applies
mutatis mutandis to a proceeding by the Board under
this Section.
18U (1) The Governor in Council may make
regulations
(a) respecting application procedures for a
permit;
(b) respecting payday lender permit fees;
(c) respecting the authority of the Registrar
under Sections 18A to 18U;
(d) respecting terms and conditions of a permit;
(e) respecting forms;
(f) respecting procedures for appeals;
(g) respecting the maximum portion of the
borrower's net pay to be loaned by a payday lender;
(h) respecting the minimum term of a payday loan;
(i) respecting the maximum portion of the
borrower's net pay allowed to be charged if the loan
agreement makes provision for instalment payments;
(j) respecting the types of fees, charges, rates
and penalties allowed to be charged with respect to
a payday loan;
(k) respecting the display of fees, charges,
rates and products offered;
(l) prohibiting certain practices with respect to
payday loans;
(m) respecting information to be disclosed to
borrowers;
(n) respecting payday loan renewal and extension
practices;
(o) respecting the cancellation of a payday loan;
(p) respecting records to be maintained;
(q) respecting other types of payday loans;
(r) respecting emerging business practices;
(s) defining any word or expression used but not
defined in Sections 18A to 18U;
(t) deemed necessary or advisable by the Governor
in Council to carry out effectively the intent and
purpose of Sections 18A to 18U.
(2) The exercise by the Governor in Council of
the authority contained in subsection (1) is
regulations within the meaning of the Regulations
Act.
It will be important to
ensure that
the government sets a clear cap on the cost of borrowing that
will balance
strong consumer protection while ensuring a viable industry that
can afford to
provide this important service