A loophole in a cabinet bill to curb usury would still allow payday lenders to charge 365 percent interest, the Department of Finance confirms. One senator described the clause in the bill as inexplicable.
“That does target vulnerable Canadians mostly,” said Senator Jim Quinn (N.B,). “Why wouldn’t we consider having a consistent application of the criminal rate? I am at a loss as to why we are not better protecting those most vulnerable.”
Bill C-47 the Budget Implementation Act lowers the maximum interest rate charged on most loans from the current 60 percent a year to about 42 percent. However it allows payday lenders to charge up to $14 on $100 typically loaned monthly or biweekly, the equivalent annual interest rate of 365 percent.
Speaking at the Senate legal and constitutional affairs committee, Senator Quinn questioned the exemption. “The annual percentage rate on $14 per $100 is still a very high rate, 300 percent or more,” said Quinn. “That’s a very high rate. I’m wondering why.”