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Curbs on high-cost loans planned

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The Selinger government plans to strengthen the rules governing high-cost loans.

On Wednesday, it introduced amendments to the Consumer Protection Act that will require companies offering high-cost credit to display clear signage explaining costs and make detailed disclosures about costs and fees before a credit agreement is signed.

Borrowers would be able to cancel a high-cost credit agreement within 48 hours of entering into it -- or at any time if they were not informed of the costs when they signed the contract.

Lenders would be prohibited from charging a fee or penalty for early repayment of a loan, would need to be licensed and contribute to a financial literacy fund devoted to promoting low-cost borrowing alternatives.

Ron Lemieux, minister responsible for consumer protection, said there are now more lenders offering new types of high-cost loans and lines of credit in addition to conventional payday loans.

He said the new rules will ensure borrowers receive complete information about these loans, including the full cost and the expected payback period.

Gloria Desorcy, executive director of the Manitoba branch of the Consumers Association of Canada, said the legislation is needed to regulate a proliferation of high-cost loan options offered outside the mainstream banking system.

"The more that (consumers) are able to understand the cost that they're paying, the more that they are able to compare between different products in that more high-cost credit market, the better it is for those consumers," she said.

Manitoba's Consumer Protection Office will monitor and inspect businesses providing high-cost credit to ensure they follow the new rules and don't exceed maximum interest charges set out in the Criminal Code, the government said.

-- Larry Kusch

Republished from the Winnipeg Free Press print edition December 5, 2013 B7

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