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The province of Nova Scotia became the first province in Canada to regulate the payday loan industry. The decision was reached after an extensive review and various consultations by the Nova Scotia Utility and Review Board (UARB). Primarily, the regulation sets certain limits to the fees and cost of borrowing.

Caps on rates and fees

First of all, the UARB imposed the caps that it established in 2008. The maximum annual interest rate is 60 percent and the flat rate for the default fee should not exceed $40. Moreover, the UARB has declared that the total cost of borrowing should not exceed 31 percent per a hundred dollars.

Other requirements

The UARB has also outlawed the practise of automatic loan rollovers in Nova Scotia. Payday loan companies may not also set the due date before the next payday. They must also totally reveal to the their clients all of the costs and fees before personal data are provided. The regulations also set the licensing of payday loan companies and these companies also have to submit yearly reports to the province. As of July 2009, there are 13 payday loan companies in the province with approximately 40 outlets.

Issues that were considered by the UARB in its 2008 hearings

The UARB also examined other issues in its 2008 meetings. These included the terms and conditions that are often specified in the payday loan contracts, the requirements for revenue and operating expenses of payday loan companies, the maximum amount that may be charged when the loan is renewed or extended, the financial risks undertaken by loan companies, and the credit options offered to borrowers. The regulations are scheduled to be reviewed again in 2010.

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