The government of Prince Edward Island has taken the next step in its decision to regulate payday lenders, says Minister of Environment, Labour and Justice, Janice Sherry.

“Payday lenders provide a service that some people find useful in managing their financial affairs. This regulatory change should allow the industry to continue in Prince Edward Island while shielding customers from unfair practices,” said Minister Sherry.

Payday loans are small loans, typically in the range of $300 to $400, that are expected to be repaid within 10 to 15 days.

The provincial government has approved regulations which will protect borrowers by requiring full and plain disclosure of the terms of borrowing, by setting a cap on the cost of borrowing and by prohibiting unfair collection practices. Fees are being capped at a maximum of $25 per $100 borrowed.

The regulations will come into force once the federal government has designated PEI as a province which can regulate the cost of borrowing payday loans. This is expected to take from six months to a year.

New regulations can be read in the February 2 edition of the Royal Gazette, www.gov.pe.ca/royalgazette/pdf/20130202.pdf.