Bill C-26 (Historical)

An Act to amend the Criminal Code (criminal interest rate)

This enactment amends the Criminal Code by exempting persons from the application of section 347 of that Act in respect of agreements for small, short-term loans. The exemption applies to persons who are licensed or otherwise authorized to enter into such agreements by designated provinces that have legislative measures that protect recipients of payday loans and that specify a limit on the total cost of those loans.

Criminal Code

[Vic Toews, Conservative, Minister of Justice and Attorney General of Canada]

moved that Bill C-26, An Act to amend the Criminal Code (criminal interest rate), be read the second time and referred to a committee.

Mr. Speaker, it is with pleasure that I speak today in strong support of Bill C-26, An Act to amend the Criminal Code, dealing with the criminal interest rate.

In its essence, the bill is about providing greater protection to Canadians. It is about enabling the regulation of an industry which, for better or for worse, has come to occupy a very real place in Canadian cities and towns.

Payday lending and the payday lending industry has, in the span of approximately 12 years, mushroomed in Canada to become an industry which is estimated to provide short term loan services to about two million people in Canada each year. It has a volume loan of approximately $1.7 billion annually. I was pleased to table this bill on October 6, 2006, as I believe it would enable more effective protection of Canadians everywhere.

Before discussing the substance of Bill C-26, I wish to point out that these amendments are the result of a collaborative dialogue between the territorial, provincial and federal governments. In this respect, I wish to acknowledge with thanks my colleague, the Minister of Industry, for it was the discussions among federal and provincial ministers responsible for consumer affairs who helped to ensure that these proposed amendments would meet the needs of those provincial jurisdictions which choose to regulate the industry.

It is important to situate this bill within its proper context. Doing so will enable us all to better appreciate its significance and the very important and practical consequences it would have in ensuring that everyday Canadians who use the services of the payday lending industry have enhanced protection against questionable business practices.

As I said moments ago, the payday lending industry is a relatively new one in Canada. Despite this, payday lending has, nevertheless, become a familiar fixture throughout Canada occupying prominent places on our streets in our communities. Indeed, just a few blocks away from this place, if one were to take a stroll in either direction, east down Rideau Street or south down Bank Street, the prevalence of payday lending outlets are readily noticeable. This is no different for communities throughout Canada.

The payday lending industry is believed to have first appeared in Canada around 1994. Beginning in the western provinces, the industry has since spread across the country from west to east. Whether we are talking about Prince Albert, Saskatchewan; Pembroke, Ontario; or Charlottetown, P.E.I.; the payday lending industry is there. In fact, the industry is currently operating in every province and territory in Canada except in the province of Quebec. In the case of Quebec, the inability of the payday lending industry to operate is a result of that province's decision not to issue licences to businesses that would charge more than 35% annual interest. This has effectively prevented the operation of the payday lending industry in that province.

Despite the absence in Quebec, it is estimated that there are approximately 1,350 outlets in the rest of Canada. It is clear, therefore, that the industry is well established. It is equally clear that it is time for effective government regulation of this rapidly growing industry.

We believe it is important to ensure that those Canadians who do use the services of a payday lender are provided the necessary protection from exploitative business practices, particularly so among the most vulnerable members of our community. The amendments proposed by Bill C-26 would allow for this.

It is important to be clear about what we are talking about when we speak of payday lending and the payday lending industry. The concept of a payday loan has really become shorthand for what is essentially a short term loan for a small amount. Generally, loans of this nature are in the range of $300 and extend for a period of about 10 days. The reasons that individuals choose to use the service of a payday lending industry are varied. Some use it for convenience while others use it out of necessity.

To date, loans of this nature have been provided by alternative retail lenders in Canada. Associated with this service, these alternative lenders will generally charge a range of administrative and processing fees as well as the interest associated with the borrowing of the moneys.

Qualification for these loans is generally straightforward. The borrower must first demonstrate proof of a steady income. Most obviously this is established through proof of employment, although employment is not necessarily required. Other sources of income can suffice in certain circumstances, including, for example, pension income. The borrower must have a bank account and must also provide a post-dated cheque or pre-authorized debit to the lender for the amount of the loan plus the associated fees and interest. Repayment of the loan is often due on the date of the borrower's next payday.

So in some respects, applying for and paying back a payday loan generally resembles other types of consumer lending. While the service provided is of a similar nature to other lending instruments, the specific form it takes is quite different.

For quite some time now, the payday lending industry has been the source of significant concern. Most notably, concerns have focused on the very high cost of borrowing, which in some cases can range in the thousands of per cent on an annual basis. Other concerns include the insufficient disclosure of contractual terms, aggressive and unfair debt collection practices, and the fact that these loans can quickly spiral out of control as a result of rolling over loans.

In light of these very real concerns, it is time for action.

This government has made a commitment to improve the lives of Canadian families. Bill C-26 reflects this commitment. Bill C-26 would amend the Criminal Code to enable provincial and territorial regulation of the payday lending industry. Currently, section 347 of the Criminal Code provides for an offence of entering into an agreement or arrangement to receive interest at an annual rate of more than 60%. Effectively, this creates the offence of charging interest at a criminal rate.

Section 347 was added to our Criminal Code in 1980. The principal policy rationale driving the inclusion of this provision was to address the practice of loansharking and that activity's role in relation to organized criminal behaviour. This was and remains a laudable goal. Organized crime poses a real threat to the safety and security of our communities. It did in 1980 and it continues to do so today.

Our government continues to take steps to better respond to the threats posed to our citizens and communities by organized crime. These include key legislative reforms in the area of gun crime as well as committing $200 million to strengthening the ability of the RCMP to combat organized crime. We will continue to strengthen our responses in this area, ensuring safer streets and communities for Canadians.

While section 347 may have been meant to address organized crime, the reality is that the provision has been interpreted as applying to most lending arrangements in Canada, including payday lending. Despite this fact, it is important to point out that section 347 is not a consumer protection tool.

The amendments proposed by Bill C-26 would clear the way for the provinces and the territories to create the tools they need to regulate the payday lending industry. In essence, the amendments would provide an exemption from section 347 of the Criminal Code for payday lenders under very specific and circumscribed instances. This exemption would be set out under proposed new section 347.1 of the Criminal Code.

How would this exemption scheme operate in practice? I am glad you asked that question, Mr. Speaker. First, the proposed amendments would define payday loan for the purpose of the exemption. A payday loan would be defined to mean:

an advancement of money in exchange for a post-dated cheque, a pre-authorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawnbroking, a line of credit or a credit card.

While this definition may seem like a mouthful, it is an extremely important aspect of the proposed amendments. Laws and legal systems are meant to provide a certain degree of precision, clearly defining the limits of the behaviour which they purport to regulate.

By defining a payday loan in this fashion, the proposed amendments provide the precision necessary to ensure that the exemption will not capture other types of lending arrangements where the policy considerations at play are very different. These amendments are targeted in scope.

We have heard the concerns expressed by our provincial and territorial colleagues in relation to the regulation of the payday lending industry and we have demonstrated our commitment through Bill C-26 to working with them to ensure that Canadians are provided increased consumer protection measures.

The amendments would further prescribe the types of payday loan arrangements that would be subject to an exemption by providing two additional requirements. First, the amount of money advanced under the agreement cannot be more than $1,500. Second, the loan agreement cannot be for more than 62 days. These are measured and well-considered limitations. They appropriately reflect what we know to be the typical payday lending situation, that is, a short term loan for a relatively small amount.

The proposed amendments specify additional requirements before providing for the exemption from section 347 of the Criminal Code. First, the payday lender must be licensed or otherwise specifically authorized under the laws of the province or territory in which the lender is operating. This presupposes the existence of a provincial or territorial consumer protection scheme. Importantly, the provincial scheme will have to include, for the exemption to apply, a limit on the total cost of borrowing under the payday lending agreement.

Should a province or territory wish to develop such consumer protection measures to address the payday lending industry within their jurisdiction, they will further need to seek a designation from the governor in council in order to provide an exemption from the application of section 347.

In practical terms this would mean that a province or territory which seeks an exemption under section 347 would write the federal minister of justice requesting that a designation for the exemption be issued. The request would need to detail how the province complies with the requirements proposed by these amendments, namely, that the province has legislative measures providing for a consumer protection scheme in place, which includes limits on the total cost of payday borrowing.

Assuming this is the case and acting on the recommendation of the federal Minister of Industry, the Minister of Justice would then ask the governor in council to grant or not grant the exemption. At any time, the province, through its lieutenant governor in council, can request that the designation be revoked. Similarly, the governor in council can revoke the designation if the legislation which establishes the consumer protection scheme established by the province is no longer in force.

This is a sensible and effective solution to a pressing concern in Canada. Bill C-26 facilitates the development of a consumer protection scheme in what has been a largely unregulated area. In so doing, the amendments recognize the constitutional authority over business practices possessed by the provinces and territories through their responsibility over property and civil rights. These amendments acknowledge that the provinces and territories are the most suitably placed level of government to implement a protection regime for consumers which responds to the needs and local circumstances that may exist in different jurisdictions across the country.

Let me pause to point out that the proposed amendments would not apply to federally regulated financial institutions such as banks. Banks and other financial institutions in Canada are already subject to federal legislation. The amendments are specifically targeted at a currently unregulated industry. We know that there is provincial and territorial support for these changes to the Criminal Code to occur. This is because many jurisdictions have indicated that the application of section 347 has been a barrier to their being able to move forward and effectively regulate the payday lending industry.

These amendments would address provincial concerns. For example, in my home province, the government has already tabled legislation to regulate the payday lending industry. Other provinces have expressed an interest in taking similar steps. In the case where provinces choose not to regulate the payday lending industry, the Criminal Code will continue to apply.

Some may argue that the payday lending industry has no place in Canadian society. They may argue that the payday lending industry exploits the situation of already vulnerable Canadians and that facilitating the regulation of this industry will only exacerbate the situation of vulnerable Canadians.

The fact remains, however, that the payday lending industry is a part of our society, and a growing one at that, and we must take the necessary steps to bring it within the purview of regulation. Doing so will ensure that Canadian consumers have more effective protection against questionable business practices.

The amendments contained in Bill C-26 provide the provinces and territories the tools they need to respond to the problem in a manner that is appropriate to the realities facing their respective jurisdictions. I am confident that this is a sound approach to a pressing issue and one which I urge hon. members on both sides of the House to support.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I want to thank the hon. Minister of Justice for his very forward move in addressing the payday lending industry.

A very recent article in the local paper talked about this industry, about how it was growing and how it affects people. We know that payday lending happens not only with people who are very short of money but also with people who are supposedly very affluent but who find that keeping up with the mortgage and car payments is a real challenge.

My question for the minister is this. Can he tell the House how much interest is made on these loans and how frequently? I know he spoke to it briefly in his speech, but the rate of lending now is quite high for the payday loan industry. What kinds of people actually frequent this? Is it something that people do on a monthly basis or just once in a while to get the money they need to live on?

[Vic Toews, Conservative, Provencher, MB]

Mr. Speaker, those are very good questions.

As I indicated, given that it is for a relatively short period of time and for smaller amounts of moneys, generally speaking, we can see the effective rate of interest sometimes exceeding 1,000%. When one is talking about 10 days for $200 and being charged administrative and other fees on top of the interest rate, and when the interest rate per se cannot exceed 60%, the effective rate of course is much greater than that. That is what we are addressing.

Recognizing that in this context of short term loans the effective interest rate may be well over 60%, there needs to be some regulation to ensure that there are guidelines and regulations in place to ensure exactly what can be charged. That is where the provinces will step in. They will set those regulations. There is no specific requirement that any province set those regulations in a specific way.

In respect of what kinds of people use this, obviously all kinds of people at all kinds of income levels use it, both the middle class and those who are not as economically fortunate. One of the things a study indicated is that many of the payday loan companies recognize that their clientele comes a very short distance from where the actual offices are set up. Often we see these offices in impoverished neighbourhoods.

Judging by that, it is safe to assume that many of the clients who are utilizing these payday lenders are in fact vulnerable and impoverished people who need this kind of consumer protection legislation.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, before the Minister of Justice attends committee, I will let him know that my party will be very happy to support this legislation in large part because when we were in government, the consultations started in 2000 with respect to this type of legislation. In fact, we were very close to bringing in legislation when the government was defeated last year.

Good consultation creates good legislation. Broad-based consultation creates good legislation. I think that is a lesson we can learn. If we do wide consultation, not only inside the minister's department but with stakeholders and people affected, we come up with a proper piece of legislation that is capable of moving through this House rapidly.

This is important and a lesson to be learned. Well defined and well consulted legislation makes efficient use of parliamentary time.

I will briefly go over some of the history. The payday loan industry, as we have heard, is a growing industry in this country. Over the last decade it has been estimated that there are more than 1,300 outlets and every year nearly 2 million Canadians utilize some aspect of the industry.

Unfortunately, along with this growth, a smaller portion of people did some practices that included some very costly practices to people who needed these services. In fact, they created things that would have been in contravention of the criminal interest rate, section 347 of the Criminal Code.

Over the course of the dialogue between the Department of Justice, Industry Canada and the Department of Finance, people came to understand that section 347 of the Criminal Code had really been instituted for the criminal organization loansharking type of activity.

The Canadian Payday Loan Association and payday loan groupings try to have a code of ethics and conduct. Even though they are not yet regulated, and hopefully will soon be regulated, in those provinces and territories, they will have to go through the scheme that is in this proposed piece of legislation, Bill C-26. We have some that are working to provide a service in a more ethical manner. Then we have some that obviously work outside the law to create as much money for themselves at the expense of people who are badly needing interim financing.

As the minister pointed out, this is not an attempt to in any way deal with the financial sector. We have the Bank Act and financial services, even though sometimes they would be dealing with less than $1,500 loan situations. We are talking about the payday loan which tends to be an unsecured loan situation for a very short period of time. As the minister has said, it is less than 62 days and the monetary limit is $1,500 or less.

We have here a sensible, working, viable scheme that will exempt those provinces that decide that it is beneficial in their jurisdiction to work with the industry to regulate and come up with some protections and regulations. Those who wish to operate in that area can do so in a manner that will be better protective of the public. That usually is a consumer protection jurisdiction of the provincial or territorial governments and not usually at this level.

That is why we had to move out of that jurisdiction and carve out an exemption in this bill to allow the provinces to do that. Some of the provinces, notably Manitoba, British Columbia, Nova Scotia and Alberta have indicated interest in doing this. Some other provinces may not be as interested. They will still be living under the Criminal Code jurisdiction and will have to enforce that situation in those jurisdictions.

It has taken a few years to get the bill ready. We are in a situation, at least in my party, to say that we do not see impediments, that this does not force any jurisdictions into making a change. It is actually more permissive. It allows them to step in and put legislation forward where they believe it is in the best interests of the people residing in their jurisdictions.

Some provinces, notably Quebec, have already operated in a different manner and the flexibility under the act is there. As noted, the designation of the province will be required under subsection 3 of the bill. In subsection 2 we have the monetary and statutory dates limitation and the licensing authorizations under the laws of the provinces. There has to be an agreement and then the province moves into the designation that is seen in subsection 3.

There is also a provision for revocation under subsection 4 that should not have to be used, but could be used if necessary and that shows some foresight. Again, interest has been defined, payday loan has been defined, and criminal interest rate is already in section 347, which has a maximum rate already.

This is progressive in that it allows jurisdictions that wish it to regulate the industry and to place limits on the costs to consumers of payday borrowing. I believe it would even have been a better ministerial speech had the minister acknowledged the work that predated his government's ascension into power as a minority government. Be that as it may, I listened to the speech by the Minister of Justice and he covered all the bases that needed to be covered in a way with which I would agree.

Having said that, this is legislation that can move forward quickly in the House. I want to reiterate that where my party sees that we can advance pieces of legislation that have been brought forward and we can support, we will do so, but where there are hastily put together, non-consultative pieces of legislation, we have to do different things in different circumstances.

With that I will end my brief comments here today and allow other parties who wish to comment in the House.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I know my colleague works very hard, particularly with respect to people.

We are talking about these payday loan places. This is obviously a sector of the economy that has a propensity to prey upon those in our society who do not have the means and the wherewithal to have bank accounts or enough money.

I have a question for her. When her government was in office, we raised a number of times, from this corner of the House, the problems of, particularly in rural communities, the number of bank branches that were shutting down across this country. It was just an absolutely massive number of communities. I think of one in my region, Stewart, B.C., now a booming mining town, which has lost all its bank branches.

The Bank Act is controlled by the federal government. It was meant to be there to regulate banking. It is such an important part of our economy. It is an important part of Canadians' lives.

I am wondering if there are any measures her government ever took to curb the loss of banking establishments in rural Canada. If not, what recommendations could she make in conjunction to the legislation that we are dealing with right now to offer some sort of sense of hope to the communities like Stewart, B.C.? These communities are somehow lost in the shuffle of where banks and these payday loan institutions are making their decisions, which is at the bottom of the deck, and very rarely with any respect to the rural communities that some of us represent.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I remember being the chair of the finance committee when we were talking about bank amalgamations. This matter came up at that time during the course of those discussions. As the member well knows, this is not directly relevant to this discussion on the payday loan bill.

However, the Bank Act itself has the sets of notice provisions. I know that they were followed in each and every case where banks made that business decision to cut. We, in all parties, were concerned and made our representations. I know in my own city I made my representations when a bank and a trust company merged together.

However, we do have to understand that the banking industry is a regulated industry and that there was no branch closing that was not done properly by regulation. Nobody got to shortcut any provisions in the Bank Act. In fact, many worked very hard to give the protections as best they could to all the employees in the areas.

Having said that, I do want to comment on the availability of the small time situation on a payday loan. We should not be confusing a small amount of loan, which would be done in a banking institution, with a payday loan. There is a difference. It is a small sum. There is no security given.

I am told the average payday loan is around $280 for a period of 10 days. It is an advance of cash against the customer's next payday. It is not a form of revolving credit. That is not what this is supposed to be. In fact, those things are among the practices, those roll-overs, that we are seeking to get rid of by instituting some of the protection that is in this current bill.

It is more designed for that one time unanticipated expense where somebody just needs help to get over a short trying period. It is not a payday loan, a long term credit project, nor is it a title loan; by that I mean a loan secured by a title to a property or an asset, such as a motor vehicle.

I am told that payday loan customers are Canadians with near median household incomes and the statistics provided by the Canadian Payday Loan Association puts 53% being women and 47% being men.

It is important to say that to qualify for a payday loan a customer has to be employed and have a chequing account. So it is not really preying at a level that I see a lot of concern.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I want to thank the member for her comments. I really appreciated a new insight into this industry and the kinds of things she had mentioned. Could the member comment a little more on the provincial side of it because we need to be partners and leaders in terms of ensuring that this bill does get through?

I thank members opposite very much for supporting this bill. It is a very important one. Perhaps the member opposite could also give some more insight into which provinces have regulated payday loans and also comment on what could be done to get the provinces on board to regulate this kind of thing in their home provinces.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I think it will be for each jurisdiction to determine if it wishes to make it. I do not really see the position of the federal government to be one of intruding and demanding that we make it. In fact that would be ultra vires, out of the jurisdiction of this level of government and it is important that we stay in our area.

The whole intent of this legislation is to allow a carve-out and let someone in. I am aware of governments that are interested. I believe that the Manitoba government has tabled but has not yet proceeded with its legislation. I understand that as of May 3 last year, British Columbia's solicitor general had publicly called on us as the federal government to provide him with the ability to properly regulate payday lenders. On May 29 the Alberta solicitor general asked for the authority to regulate the payday loan industry in Alberta. This past summer, on July 13, Nova Scotia's minister of service said in the legislature that Nova Scotia plans to introduce legislation on payday loans. There are some. I know Ontario had been more reticent at this stage.

There are some who would say that this is a downloading to the provinces. I think there are options here and I view it this way. It is similar to when we were developing the best legislation in consultation with first nations. The way we got five bills through in a minority government was to make sure that on a lot of the first nations governance legislation, regarding economic issues in particular, there was wide consultation. Not only was it done in consultation with the first nations, but often the consultation was first nations led. Here we have a comparable situation where someone is coming forward.

I would also be remiss if I did not mention the advocacy of the Canadian Payday Loan Association, which is an umbrella group of about 850 of the currently 1,300-plus payday loan lenders. This group is striving to clean up the industry and in fact operates inside a voluntary code of ethics. The group wants this legislation. In fact it is pushing for it. Representatives of the group came to see me last spring and I said they would have to push the Minister of Justice.

We were prepared to move forward. We had done the consultations and here we are, some months later in the fall. The Minister of Justice, in April last year, said in talking with the Canadian press that he planned to take action to attempt to regulate the payday loan industry.

I will say that when legislation like this comes forward, it cannot just be worked through one department. We have had the cooperation of industry officials inside Industry Canada. They have been working at it with the original umbrella organization since the year 2000. Finance officials have to be involved. When legislation is worked through the appropriate channels and it makes good common sense, it is important to move on it.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, the purpose of Bill C-26 is to provide for stricter regulation of the payday lending industry, which could also be called the wage advances industry. In Canada, the industry began to take root in the 1990s. Its growth has not been uniform, however, since it falls under the jurisdiction of Quebec and the provinces over local commerce and civil rights and is thus subject to the rules governing contracts and consumer protection in each jurisdiction. Accordingly, while the federal government believes that this industry now has over 1,300 points of sale, they are unevenly distributed and there are not very many in Quebec.

Several payday lending companies have joined together to form the Payday Loan Association of Canada. That association represents 22 companies that operate a total of 850 points of sale for financial services across Canada, but none in Quebec.

What is a payday loan? To the Payday Loan Association of Canada, a payday loan is an unsecured small-sum short term loan typically for a few hundred dollars. The average payday loan is around $280 for a period of 10 days. We can see that payday loans are really meant for low income earners, and this is why, at this point, I want to talk about poverty.

When someone needs to borrow at a high rate from this payday lending industry in order to make it to the end of the month or the end of the week, the reason is that the person is poor in Canada. The most recent Statistics Canada figures, from the year 2000, tell us that there are 1.3 million more poor households in Canada than there were 25 years ago. So the poverty rate among the working population, among people who earn low wages and who will have to do business with this payday lending industry, has gone up.

Poverty is rising among the working population. There are poor families, and poor children, in Canada. The most alarming increase in the poverty rate for families has occurred in young families where the head of household is between 25 and 34 years old. We also see that in 1997, 56% of families headed by a single mother were living in poverty, and they accounted for 43% of poor children.

What we are seeing is rising poverty. We are going to try to deal with it by legislating, and this may be legitimate, but the fact remains that what we have seen during that time is that single-parent families, aboriginal people, people with disabilities, members of visible minorities and people with little education are the poorest people in our society. At the same time, the government is cutting funds for literacy training, social housing, the status of women—all measures that are genuinely going to help people deal with what lies at the heart of the problem. It seems to me that we cannot legislate to deal with only one aspect of the situation.

Obviously, the Criminal Code did not include a definition of payday loan. Nonetheless, it is important that we find a way of solving the problems of poverty in a more comprehensive manner, not going at them piecemeal with a bill like this. According to the federal government, a payday loan is defined as:

—a short-term loan for a relatively small amount, to be repaid at the time of the borrower's next payday.

The Financial Consumer Agency of Canada, which falls under the responsibility of the Department of Finance, indicates that it is possible to borrow via a payday loan. This is limited to 30%. I see this amount of 30% on a paycheque after the various deductions and income tax. It is often said that a family should not spend more than 30% of its income on accommodation. This leads to a very problematic situation in which payday lenders will ask their clients to give them a post-dated cheque or pre-authorized withdrawal directly from a bank account, and will add various fixed service charges as well as interest.

This seems to be a downward spiral that is difficult to stop for these less fortunate families, who, I would remind the House, are becoming even more impoverished. Certainly, more prosperous people do not resort to these lending agencies. They are more likely to go to their bank or credit union, as is the case in Quebec.

Quebec has its Consumer Protection Act. Payday lenders were once numerous in Quebec but the consumer protection bureau decided to intervene. After that, the combined efforts of the police and the consumer protection bureau all but eliminated that industry within our territory. Furthermore, the Consumer Protection Act contains strict provisions to regulate the entire lending industry.

Thus, we see that opinions are divided on Bill C-26. The Quebec government shares the Bloc Québécois' concerns because we see that, under this bill, any provinces can be granted an exemption by the federal government under certain conditions.

We feel that by placing conditions on exemptions, the federal government is interfering in one of Quebec's areas of jurisdiction. Indeed, Quebec is already regulating this industry, without having to account to the federal government. The maximum interest rate is set at 35% in Quebec, which is far less than the 60% in the Criminal Code. In addition, with its designation provision, the federal government is reserving the right to veto the measures taken by the province that requests the exemption. Although the mechanism for granting the designation is still unclear, it appears that ultimately, the Prime Minister will determine whether or not to grant the designation. Such a veto, in an area under Quebec's and the provinces' jurisdiction, seems inappropriate to us.

I will remind my colleagues in this House that Quebec does not always welcome vetoes.

The Bloc Québécois is therefore opposed to the principle of Bill C-26. However, the Bloc Québécois feels that although the federal government has the authority to include in the Criminal Code a maximum interest rate beyond which it becomes illegal to lend money, it does not have the authority to regulate industry trade practices.

The federal government does not need to decide to implement a licensing system or judge the merits of how Quebec and the provinces regulate the practices of this sector.

In our opinion, Quebec is free to regulate the trade practices of the companies under its jurisdiction, and the federal government does not need to impose a veto for the legislation to apply. Despite the Conservatives openness and respect during the election campaign, the fact is that the Harper government is carrying on the federal tradition of interfering in the jurisdictions of—

[The Acting Speaker, Royal Galipeau]

The hon. member just mentioned another hon. member by name. She has enough experience in the House to know that this is not done, and I would appreciate it if she did not do it again.

The hon. member for Sherbrooke has the floor.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I would like to congratulate my hon. colleague on her speech on Bill C-26.

In listening to her, I put myself in the shoes of citizens listening to the explanations here in the House of Commons. Unfortunately, I think that the 10 minutes given to my hon. colleague were not enough for her to delve further and provide more specific information about this bill and the reasons why the Bloc Québécois is opposed to it.

I would therefore like to ask her to be more specific for the benefit of citizens. Does this bill set a maximum interest rate for borrowers? I would also like her to tell us whether this rate is still usurious or not.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, the bill sets the interest rate at 60%. To me, that seems usurious.

As I said, the Office de la protection du consommateur limits the rate to 35% in Quebec. Even that strikes us as too much.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I believe the hon. member has some incorrect information on this. The present Criminal Code provides a maximum limit in the 60% range as the amount of interest that can be charged. The amounts of the loans are very small and these companies have to cover their administrative costs, registration and so on, but even charging $10 for one month on a loan of $200 is way over that limit. This bill would permit the provinces to regulate that and ensure there was no abuse of it. However, it still would allow these businesses, which do perform a valuable service, to carry on with their business.

Many firms do this. I received a little thing in the mail a couple of days ago from a retailer I will not identify, indicating that there would be no interest until next year. However, written in small letters underneath, it said a $15 service charge would apply. If we compute that as a rate of interest, it increases it considerably, although it is not called interest. This also needs to be regulated.

I gently correct the member to ensure that what she is talking about vis-à-vis this bill is accurate.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Mr. Speaker, I thank the hon. member for his remarks.

In our respective provinces, companies clearly sell furniture by saying there will be no interest for one year. However, something else is going on. It is very easy for businesses to increase the price of something and then give us the impression that they are giving us some kind of discount.

That being said, it is not that we are opposed to an interest rate limit at the outer edges of what working people can afford when they have to deal with payday lenders. What we oppose is the federal government administering this program. In our view, this is a provincial jurisdiction. Quebec is already handling it very well, together with the Office de la protection du consommateur.

Our position is always the same. The government that is closest to the people is the one that is best able to understand the situation, set standards, and exercise its constitutional jurisdiction.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, before putting my question to the member of the Bloc Québécois, I would like to draw the attention of the House to what the Conservative member said.

The member was talking about 60% interest. If someone borrows $200 at 60% interest—interest rates are always calculated on an annual basis—that amounts to $120. If we divide that by 12, it is $10. For a loan of $200, an individual would pay $10 dollars interest per month. That does not seem exorbitant, but when you make the calculation the rate of interest is 60%. Unfortunately for those lenders, it is possible that $10 per month may not cover the administration costs.

That means that, strictly in terms of the profitability of such a service to the public—if it can be called that—the rate of interest would have to be even more exorbitant.

Therefore, I ask my colleague whether, given the conditions relating to the operation of such a business, we should not simply forget all that and create a bank for small loans and in doing so introduce regulations that better protect consumers?