Consumer Protection Legislation is Catching up with Technology

Consumer Protection Legislation is Catching up with Technology Header Image

It might not sound sexy but it’s exciting nonetheless….Recent amendments to the British Columbia Disclosure of the Cost of Consumer Credit Regulation have opened the doors to real time digital consumer loan products.

The Business Practices and Consumer Protection Act and the Regulation require credit grantors who extend credit in the ordinary course of carrying on their businesses to provide borrowers with disclosure statements setting out certain information regarding the cost of borrowing, including the total cost of credit and the annual percentage rate (APR).

Effective March 1, 2017, the Regulation was amended to permit credit grantors to deliver many of the various required disclosure statements by electronic means (provided the borrower consents in writing). Prior to these amendments, electronic delivery of disclosure statements was not permitted under the Act.

This was problematic for financial institutions wishing to use online lending platforms with instantaneous credit approval processes to loan money to consumers in British Columbia. This was a clear example where the law had not caught up to technology.

Whereas everything up until the cost of borrowing disclosure could happen in real time (e.g. the loan application, credit approval, etc.), the lending process would get stuck at the disclosure statement step, at which point the lender would have to mail or otherwise deliver a paper copy of the disclosure statement to the borrower before the loan funds could be advanced.

With this recent legislative change, credit grantors will be able to complete the loan process instantaneously and digitally. The change is exciting because it could potentially result in a greater variety of short term loan products being made available to consumers by financial institutions, thereby providing consumers with options beyond payday loans.