Cabinet's decision to lower the usury rate from 48% to 35% annually has been criticized as inadequate by a Liberal-appointed senator, who highlighted the continued exemption of payday lenders charging exorbitant rates."I am still wrestling with the fact a new criminal interest rate is 35%," said Sen. Hassan Yussuff (Ont.), former national president of the Canadian Labour Congress. "Most people say that’s still criminal."Blacklock's Reporter said the change, enacted through Bill C-69, the Budget Implementation Act, brings the criminal interest rate down from its previous high of 60% two years ago. While the new maximum annual rate aligns with Québec’s 35% cap on interest charges, it does not apply to payday loans in other provinces. Payday loans are defined as loans of no more than $1,500 due within 62 days.Yussuff expressed his concerns about the measures to the Senate banking committee, stating, “Do you find 35% not to be an exorbitant amount?” He added, "The government should be doing much better. I think if you ask Canadians they will argue the same thing."Sen. Pierrette Ringuette (N.B.), who has previously sponsored multiple unsuccessful private bills to lower usury rates, also criticized the persistently high interest rates of payday loans. “My recent research indicates the lowest interest rate for payday loans right now is in Newfoundland and Labrador,” said Ringuette. “It is the equivalent of 375%.”Elizabeth Mulholland, CEO of the advocacy group Prosper Canada, testified on February 27 at the Commons finance committee that payday lending remains a significant issue. In 2007, Parliament delegated the regulation of payday lenders to the provinces. Mulholland emphasized, "There is actually very little to distinguish a high-cost lender today from a loan shark. Both charge exorbitant interest with no regard to the consumer’s ability to repay and then hound and pressure them and their families relentlessly when they fall behind in their payments."During the 2023 hearings of the Senate legal and constitutional affairs committee, it was revealed that successful usury prosecutions are rare, with only four or five cases a year. "We haven’t seen much," said Kenyatta Hawthorne, criminal law counsel with the Department of Justice. From 2016 to 2021, a total of 283 criminal charges were filed, but only about 7%, or 21 charges, resulted in guilty findings, according to Hawthorne.Hawthorne also noted that provinces, responsible for prosecutions, "indicated essentially they were unable or unwilling to enforce the current criminal maximum rate of interest for payday loans. This is mainly because of the large volume and low value of these particular types of loans."
