Let’s put an end to predatory interest rates

Right here in Canada, unscrupulous financial institutions and lenders are able to evade the criminal code by charging up to 600% interest on loans contracted by the less fortunate in society.

You read 600% or 10 times the current 60% interest rate referred to as “criminal”.

Peter Julian, NDP MP for New Westminster-Burnaby, condemned this abusive lending during the first reading of Bill C-213 on December 14: “An Act to amend the Criminal Code (the rate of ‘criminal interest’).

The Trudeau-Freeland Decline

What has the Justin Trudeau government done so far to combat these financial abuses?

Against all odds, he found a way to backtrack on measures taken in 2021 to combat abusive interest rates.

In their 2022 budget, Justin Trudeau and his Finance Minister Chrystia Freeland didn’t say a word about what they called “loans on abusive terms” and “criminal” interest rate cuts.

But…

In the budget ahead of the April 2021 election, Justin Trudeau’s government pledged to crack down on predatory lending.

“To fight against predatory lending, in the 2021 budget M^me Freeland, the Government of Canada will begin a consultation on lowering the criminal rate specified in the Criminal Code of Canada, which applies among other things to installment loans offered by payday loan companies.

In the end, no “deliberation” took place.

We still struggle with a “criminal rate” that is officially 60%. But in reality, as MP Julian decried, the rate is high with many loopholes and it results in complete impunity for financial abusers.

Bill C-213

What is NDP MP Peter Julian doing with Bill C-213?

“This bill,” he explained to his colleagues in the House of Commons, “will close loopholes that allow financial institutions and payday lenders to charge rates of 500% or 600%, and halve the interest rate currently allowed. Criminal Code.

“I’d like to give just one example out of many that exist. A resident of my riding, whom I’ll call Lisa, paid $13,000 in interest over a few years. She was struggling to pay groceries and rent on a $700 emergency loan and couldn’t repay a single dollar of principal the entire time.

30% criminal rate?

Ultimately, Bill C-213 aims to significantly reduce the level of usury described as “criminal” in the Criminal Code. Instead of 60%, the interest rate becomes “criminal” as soon as it crosses the Bank of Canada’s key rate of 30%.

Had Bill C-213 been in force, the “criminal rate” today would have been estimated at 32.5% (30% + 2.5% of the key rate). This is still high compared to the 20-22% interest charged by credit card issuers.

By the way, many consumers are currently being duped with interest charges ranging from 34% to 45% and even more related fees.

It’s important to know that many dealers in Canada (used car, furniture, hardware stores, etc.) have contracts with financial institutions that may charge consumers abuse fees when they buy on credit.

Most importantly, the new criminal interest rate includes: “all charges, agios (overdraft interest charges), commissions, insurance charges, fines and damages, paid or payable by or on behalf of the debtor to any person, in lieu of capital lent or to be lent will be

Defined this way, it prevents savvy lenders and financial institutions from using various loopholes to squeeze borrowers like lemons.

It’s never too late to do good. I therefore invite Justin Trudeau and his Finance Minister Chrystia Freeland to support the most honorable passage of Bill C-213.