Justice committee  Mr. Murphy, we tend to put definitions in section 2 only if the term being defined appears in several places in the code. I must say that the structure isn't perfect and the form isn't always followed. Generally, section 2 should be reserved for those terms that are going to appear in several different places in the code.

Justice committee  Yes.

Justice committee  I think you should assuage most of their concerns. If they are simply pretexting, pretending to be persons they're not or using fraud or false pretences to obtain information for the purposes of the investigation, they're simply amassing the information to report to their client or whomever.

Justice committee  Thank you, Mr. Chairman, members of the committee. I think Mr. Moore has pretty much summarized the general purpose and intent of these amendments. I'll keep my comments very brief, and then I think perhaps we can be of service to the committee by simply answering any questions you may have about the amendments.

Industry committee  No. With respect, if Quebec, as I say, or any other province is going to regulate at or below 60%, then section 347 can simply apply as well, and there's simply no conflict and no need for an exemption. If there's going to be an exemption from section 347, there are simply two requirements: that there be a consumer protection regime that applies to these payday loans, and that it include alternative limits on the costs of borrowing.

Industry committee  Quite frankly, that's more or less the way it's going to operate. The province is going to inform the federal government that it has legislative measures that protect recipients of payday loans and that provide for limits on the total cost of borrowing under the agreements. Once they have advised them that they have those measures, the designation will flow from that.

Industry committee  I haven't seen a written opinion and I haven't actually heard an oral opinion from the Government of Quebec. Quebec did participate in the alternative consumer credit market working group. In fact, the Quebec representative on that group was very active and very helpful in the group's deliberations.

Industry committee  Neither Quebec nor any other province requires any permission of any sort from the federal government to regulate any lending industry in its province within the 60% limit set by the Criminal Code. The Criminal Code otherwise applies to all lending transactions in Canada, so if a province wishes to allow lending transactions in excess of 60%--and that's what we're talking about with payday lending--then the Criminal Code otherwise simply prohibits that and makes it a criminal offence.

Industry committee  Indeed, Mr. Bagnell, the purpose of proposed section 347 is to provide a mechanism to deal with what we all understand to be loansharking, with its attendant violence, threats of violence, coercion, and those kinds of well-known criminal aspects. It was never really intended to be a consumer protection measure simply regulating business transactions.

Industry committee  The limit is 60%. Given the circumstance in which the payday lenders operate, the limit simply doesn't seem to be a realistic one for them to operate under.

Industry committee  Perhaps my colleague from the Department of Industry might be able to comment on what goes on in the United States. Certainly they have similar kinds of regulatory frameworks in many states.

Industry committee  Perhaps I can comment, Mr. Bagnell. Certainly we're talking about provinces regulating these payday lenders and allowing them to charge more than 60%. If they were charging less than 60%, there would be no need for the exemption. The exemption is necessary so that they can allow them to charge more than 60%.

Industry committee  Yes, and Quebec does indeed effectively limit interest to about 35%, I believe, through what I believe is an unconscionable transactions act. That effectively means payday lenders can't and don't operate in Quebec. Any other province could choose to do that.

Industry committee  The majority of the other provinces do wish to allow the payday lending industry—we have any number of them in Ottawa operating in storefront operations—to operate in a lawful, regulated environment. The consumer affairs ministries of those provinces have accepted that there is a demand for those kinds of loans and those kinds of circumstances, but that the lenders cannot operate viably in the circumstances in which they do with an effective annual rate of interest at 60%.

Industry committee  It applies to any lending transaction in Canada.