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Ontario Protects Payday Loan Users

Archived News Release

Ontario Protects Payday Loan Users

McGuinty Government To License Lenders, Protect Consumers

Ministry of Consumer Services

Ontario is taking steps to provide additional protection for users of payday loan services.

Beginning April 1, 2009, users of payday loans will benefit from stronger consumer protections in the Payday Loans Act, 2008. The legislation will:

  • Require payday lenders and loan brokers to be licensed, starting on April 1, 2009.
  • Prohibit certain industry practices, including "rollover" loans, effective July 1, 2009.
  • Give payday loan borrowers a two-day "cooling off" period to cancel a loan with no reason without incurring a penalty, effective July 1, 2009.
  • Establish an Ontario Payday Lending Education Fund, paid for by licencees.
  • Set a maximum total cost of borrowing cap for payday loan agreements in Ontario of $21 per $100 borrowed, as recommended by Ontario's Maximum Total Cost of Borrowing Advisory Board.

The legislation also provides for enforcement and prosecution of violations and the ability to revoke, subject to appeal, the licenses of payday lenders and loan brokers.

Quick Facts

  • Ontario has about 750 payday loan storefronts.
  • British Columbia, Manitoba, Saskatchewan, New Brunswick and Nova Scotia have passed payday lending legislation. Nova Scotia proposes to charge $31 per $100 borrowed for payday loans; Manitoba proposes to charge $17 per $100 borrowed; British Columbia proposes to charge $23 per $100 borrowed.
  • Ontario requires federal designation before the maximum total cost of borrowing cap for payday loan agreements will come into force.

Background Information

Additional Resources


“Ontario is taking a balanced approach to payday lending. Social advocacy groups have stated that Ontario's payday lending industry serves an important need for people who need immediate financial assistance. We are making sure those who need access to credit have options and protections available to them.”

Harinder Takhar

Minister of Small Business and Consumer Services

“I applaud the licensing of payday lenders in Ontario. A cooling-off period is essential for consumers to have an opportunity to cancel these loans and a cap on lending is a necessary component to this legislation. We believe these steps give consumers the protection they need when dealing with payday loans.”

Laurie Campbell

Executive Director, Credit Canada

“The regulation of payday lenders is a positive step forward for Ontario consumers. We are encouraged by the protections and look forward to reviewing this cost structure as the industry adjusts to the new regulations.”

Roy Anderson

Leading Member, Association of Community Organizations for Reform Now (ACORN)



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