Hansard — Tuesday, October 23, 2007 a.m.

The following electronic version is for informational purposes only.
The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY


CONTENTS

	Routine Proceedings
		Page

Committee of the Whole House		8723
	Business Practices and Consumer Protection (Payday Loans) Amendment Act, 2007 (Bill 27)
	Hon. J. Les
	R. Fleming

Reporting of Bills		8731
	Business Practices and Consumer Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Third Reading of Bills		8731
	Business Practices and Consumer Protection (Payday Loans) Amendment Act, 2007 (Bill 27)

Committee of the Whole House		8731
	Securities Amendment Act, 2007 (Bill 28)
	L. Krog
	Hon. W. Oppal

Hon. M. de Jong: I call committee stage of Bill 27, Businesses Practices and Consumer Protection (Payday Loans) Amendment Act, 2007.

The House in Committee of the Whole (Section B) on Bill 27; S. Hammell in the chair.

Hon. J. Les: I move the amendment to section 4 standing in my name in the orders of the day.

R. Fleming: I wanted to ask the minister a couple of questions about how the regulations will be brought into effect in regard to the charges that are defined in this section and whether he can outline to me when this is to become law, how the public will proceed to be able to make known to the minister and to the branch in the ministry that is charged with enforcement of this act and with devising regulations, and whether there will be a provision for public hearings in certain areas of the province — those kinds of things.

Hon. J. Les: Over the period of time that we have been producing this legislation, there have been very significant amounts of consultation not only with the public but more specifically with the various stakeholders in the industry. Once the bill has been passed by the House, we will be re-engaging in that consultation process with the various stakeholders in a formal way, given that the bill will then have been passed by the Legislature.

We will be posting on the website opportunities for people to respond to specific questions. Once that process is completed, we will be engaging in meetings — again, open to the public — and with stakeholders to ensure that they have input in terms of the regulations. Of course, once the regulations are formulated, they will proceed to cabinet for approval and implementation.

R. Fleming: Just further on that, if I could have the minister comment on the use of the Business Practices and Consumer Protection Authority to conduct that public information gathering. Will it then be formal hearings? Will the meetings be transcribed? Will it be advertised in major newspapers to the public? Will there be an invitation beyond, I suppose, just the stakeholders that one can readily see as having an interest in this legislation? Is there provision for that authority to conduct hearings like that now, or would this be sort of a special…?

If he were to agree that that was desirable, to have that level of openness and transparency in gathering public views, is that something that the authority has the capacity to do at this point in time?

I know the B.C. Utilities Commission, for example, does have experience with this in setting rates for basic utilities in advance of the regulations, which are the most important part of this legislation for the consumer and for the public.

It would be, I think, of extreme benefit for British Columbians to also have an opportunity to participate in that way.

Hon. J. Les: I just want to be clear here. It will be the ministry that will lead the consultation process, not the Consumer Protection Authority. Once the regulations have been formulated and approved by cabinet, the Consumer Protection Authority will be responsible for implementation.

The consultation process is something that's being done by the ministry, and it is intended that that be an

open consultation process. We are fully aware of a range of stakeholders, consumer organizations and other interested parties who will want to comment on the regulations as they proceed. So we want to get all of that input, and it will be the ministry that will be in charge and responsible for that.

R. Fleming: Could the minister give an indication of what kind of time line he would suggest would be appropriate for determination of things like the maximum amount that interest and fees can be and all of the other things that are major elements of this bill that are to be determined in regulations?

Could he suggest what period of the remaining calendar year or into the next year would be required and when those regulations would come into force?

Hon. J. Les: I can assure the member that our objective here is to try to get this legislation and the regulations implemented as quickly as we can, but I am sure the member can also appreciate and understand that this is going to take a bit of time. We need to consult not only with the industry but with the public and with various stakeholders. It's envisioned that that will take the balance of this year and the early part of next year. We would anticipate having the draft regulations completed by the spring of next year and, hopefully, approved by cabinet.

At that point, of course, we then turn our attention to the implementation of the legislation and the regulations. Again, I'm sure the member opposite can anticipate that that will take a significant amount of adjustment and preparation.

I am somewhat hesitant to speculate on exactly when this bill will be fully implemented, but in terms of the consultation and regulation development process, it is our intention and our best guess at this point that that can be completed by the spring of next year.

R. Fleming: The section around bringing in licensing requirements, then — would that be something that would take immediate effect after this bill comes into effect?

If the minister could just give some comments on how payday lending institutions will apply for licensing — when that might occur and whether it will be done on a company basis or on a location-by-location basis for each entity.

Hon. J. Les: Again, I don't want to downplay what will be a fairly complex process in terms of getting this legislation in place once it has been approved by the Legislature, once the regulations have been developed. We will need to apply to the federal government, for example, for their sign-off. This is all being done, of course, in the context of the Criminal Code, and this is actually carved out from the Criminal Code. So that will take some time.

We need to have everything completed and done and ready for rollout before we can start the licensing process. You can't commence a licensing process and then still be in the process of developing the regulatory scenario, for example. All of that has to be completed before we can undertake licensing.

In response to the member's question about whether we intend to regulate or license franchise by franchise or location by location, our thinking is that we will do this location by location.

R. Fleming: On the point that the Solicitor General finished on, I'm glad to hear that. I think that's wise when it comes to enforcement on a location of a company. Where there are to be violations of the act, I think that will prove to be in the public interest.

On the licensing issue, though, B.C. is one of a minority of provinces that has had no licensing regimes specific to this industry. Even with the uncertainty and the lack of clarity from the federal government on interest rate laws and how those can be applied to this specific financial product, other jurisdictions went ahead and had licensing in place.

I wonder if in fact the situation is as the minister has described or whether, even in the absence of the regulations that will determine what the loan document looks like and what the maximum fees and charges are, the government can simply begin immediately to start licensing the industry — because we will have definitions of what it is — and whether this consumer protection act will be amended to have that capacity and whether very simple things around licensing can begin almost immediately — the background of applicants, whether they have criminal records and those kinds of things.

That was really where I was going with that question. I wonder if the minister could comment on whether B.C. could "me too" on the other provinces that have licensing already in place, although in some cases they don't have legislation like we do on the actual payday loans themselves.

Hon. J. Les: It's important to know that although some provinces had a practice of licensing this particular industry, they were in fact extremely uncomfortable in doing so because before the federal government provided a carve-out to the Criminal Code, these provinces were almost in the position of knowingly licensing businesses that were illegally carrying on their business.

That is why British Columbia actually held back. We didn't want to almost be complicit in licensing businesses that were illegally conducted. That is why British Columbia took the lead in consultations at the federal-provincial-territorial level over the last five years. What we accomplished out of that was this particular carve-out, giving the provinces more tools to deal with these industries in the appropriate way.

I think that logic would continue, at least in thinking about it here. If we were to license them next week, for example, we would be licensing them in advance of the new regulations being complete and ready to go. Some of the practices that we disapprove of would still be ongoing, and we would in fact be licensing those practices.

My preference is to make sure that we bring the regulations forward, that we have a regulatory regime ready to go and that we have legislation with all of the appropriate teeth in it so that we can actually license people in this industry who should be licensed and presumably also be in a position to deny licensing to those who should not be carrying on business the way they are.

R. Fleming: Thank you, in part, for the response. I wonder if I could maybe get a further comment from the minister on this.

One of the advantages of having a licence is that…. I know the minister is aware that there are some operators, shall we say, on the margins of this industry that operate one week under a certain name and can then change the name of the business very shortly after that.

The spring is still a ways away for this legislation to be accomplished. There are some abuses that even with the uncertainty around interest rates and fees not being regulated yet…. In terms of the province being able to get some compliance from those that are abusing their borrowers in ways where…. They could be potentially stopped, because their licence would be revoked if they tried to reincorporate.

I wonder if the minister could comment. That is one of the advantages in those five provinces I'm aware of that have licensing already, only one of which has legislation like this. They have that ability to clamp down on those kinds of operations. If the minister could comment again on just bringing the licensing into force and whether in fact that could be done in advance of the regulations being decided.

Hon. J. Les: There was a decision made by the province in the late '90s, as a matter of fact, to not license this industry because it would, in effect, condone the practices of the industry. I think that position is still valid today.

If we were on the very threshold of actually having the legislation complete and the regulations developed at this point — if we were going to, at this stage, start the licensing process — I think it would be a rather costly mistake.

We are, in my view, far better off to be patient for a few more months and get the legislation to a point where it's effective, where we can launch it cleanly without any compromise whatsoever so that we can effectively deal with this industry — properly license those who will be in conformity with the new legislation and regulations and, frankly, deny licensing to those who will not comply.

R. Fleming: Then I would ask the minister about when licensing eventually comes into place — if he could describe a few things about where he sees the regulations going in that regard. For example, will licences be transferable or assignable? Will the director of the Business Practices and Consumer Protection Authority have the power to suspend?

Maybe I'll ask questions as they come. The one that I'm particularly interested in is whether, as a condition of licensing…. First of all, what kind of background checks will be done on the individuals applying for them? Is this in fact a screen so that if there are certain things that the province becomes aware of, there are conditions in which a licence can be declined?

An additional question in this little group, if that's okay. Will there be any kinds of bonds or deposits as a condition of licensing, held by the province, refundable upon that person winding down their business, I suppose, but also usable in the case of difficulties and orders of compliance, etc.?

Hon. J. Les: In response to the member's question, I would first of all direct him to the Business Practices and Consumer Protection Act, which is very much in play in developing this piece of legislation, specifically part 9 of the act dealing with licences. It sets out the powers of the director dealing with transferability of licences — for example, that is not permissible — and all of the other powers of the director.

Also, part 14 of the act, which deals with the regulations that can be developed under the act…. If the member consults the Business Practices and Consumer Protection Act, he will find all of the information that I think he requires and that he has been asking for with respect to the implementation of the legislation.

R. Fleming: I appreciate the direction there. I just wonder if the minister could help me in answering that specific part of the question, though, of whether a bond or security can be required as a condition of licensing — a deposit of cash, that kind of thing — and whether that will be the case for this industry.

Hon. J. Les: Again referring to part 14 of the Business Practices and Consumer Protection Act, it says, and I'll paraphrase slightly, that cabinet may make regulations respecting the type of security, the form and content of security and the circumstances under which the security may be realized, etc. Clearly, those powers are contemplated in the act, and this will obviously be part of the regulation-making process that we referred to earlier.

R. Fleming: I think the minister might have to quote the section for me again, but I just wanted to ask about where a licence is being applied for and what kind of screening process is in place and under what conditions, I guess, the director of the authority — I don't think it's the minister — will be able to deny a licence or revoke a licence. And if the minister could just comment on what he envisions regulations to be looking for in that regard — what he would consider unsuitable offences for someone to conduct business legally in this industry.

J. Brar: Visiting us today in the gallery is a group of grade 11 social studies students from Tamanawis Secondary School in my riding. They are here to see this beautiful and historic building and also to observe the members of this House as they debate the important issues of the people of British Columbia. These students are also accompanied by their teachers, Ross Jacobsen and Lindsay Ball. I would urge every member of this House to please make them feel welcome.

Hon. J. Les: Again, I would refer the member to part 9 of the Business Practices and Consumer Protection Act and specifically section 146 where it says that the director may refuse to issue or renew a licence or he may suspend or cancel a licence, etc. It goes on to say that the director may make a decision under the subsection that I've just quoted if:

So I think we have the legislative tools that we need to give the director the authority, in conjunction with the regulations that are still in the making, to ensure that those who should not be licensed in this industry, in fact, won't be.

R. Fleming: I thank the minister. I think from what he's just described from the act that, indeed, where there are reasonable grounds to believe that somebody will not act in an ethical or honest capacity in this industry, the government will be able to prevent them from successfully getting a licence. I think that's the assurance we want around this industry.

What was not mentioned in the reasons to deny a licence is in the case where you may have somebody applying who is actually, personally, through whatever business, in a stage of bankruptcy proceedings. I wonder if the minister can give assurances that where somebody is not discharged — bankruptcy in a business, either in this industry or something else — but the government is aware that there are proceedings around such a situation, the government could, in those cases, under the part of the act you've just described, deem that person unsuitable and not issue them a licence.

Hon. J. Les: Clearly, as the director eventually makes determinations as to who is or who is not eligible to obtain a licence in this industry, financial viability has got to be one of the determining factors. Again, without being too speculative, I would suggest that it pretty much goes without saying that somebody who is in the process of being an undischarged bankrupt would not likely be a candidate for licensing in this industry.

R. Fleming: Well, I would hope not too. Obviously, people who may be in that kind of personal circumstance are not prohibited from going into all kinds of business. They can take out a loan and open a restaurant or do all kinds of things and get licensed for it. But I think it's important in a business where you're lending others money and advancing that that they be absolutely financially sound and whole and that there be no question about that.

I'm a little concerned. I do indeed hope that those are the kinds of things that the director will be looking for and will deem to be an automatic disqualification for getting into this industry.

I wonder if the minister could comment on cases where the licence applicant is a corporation or a partnership, and whether the director will in fact review who in a corporation, for example, forms the board of directors and look into those kinds of backgrounds, or exactly what name will be on the line in terms of the entity applying for the licence.

Hon. J. Les: Again, I should refer here to the Business Practices and Consumer Protection Act. Section 199 goes to the concern that the member has raised where it says the Lieutenant-Governor-in-Council "may make regulations as follows," and (a) says clearly: "establishing the qualifications to be met by an applicant for a licence."

Clearly, that contemplates setting standards and qualifications, which will be done in regulation, to ensure that we weed out the unsavoury types who might possibly apply for a licence in this industry.

R. Fleming: I just wanted to ask the minister about the thinking in his ministry around locating enforcement inspection licensing with the Consumer Protection Authority of B.C. I understand they are responsible for loan collections and those kinds of industries — debt collection.

There certainly are some other possibilities that could take responsibility. I know that in other provinces they're using their utility commissions as the vehicle for bringing this into being and also for creating the regulatory framework for the industry. Similarly, in B.C. we have the Financial Institutions Commission.

If the minister could just comment on the range of options and maybe how they landed on this particular area and this authority.

Hon. J. Les: I appreciate the question. Obviously, different provinces do things in different ways. We in British Columbia have decided that the Consumer

Protection Authority is the vehicle through which we can best enforce this particular legislation.

In other provinces it's true…. I think it's Manitoba that uses their utilities commission, but I believe it's correct to say that they use the utilities commission there to set the rates. I'm not aware that there's actually a role there for the utilities commission to enforce the legislation, so that would be a limiting factor.

The Financial Institutions Commission, again, has a role in terms of banks, credit unions and very sophisticated lending institutions, but for us, this was a consumer protection issue. We have the Consumer Protection Authority, which is independent, at arm's length from government and with a clear mandate for consumer protection. Armed with this legislation, when it is complete, we think that they will be in a good position to enforce the legislation and to effect a strong measure of consumer protection.

I don't think there's any particular magic in locating it in one place or another place. We have determined, however, that in the British Columbia context, the Consumer Protection Authority is the right place to put this to get the maximum amount of consumer protection.

R. Fleming: I hope the minister is right. There will be a great deal of oversight required on this industry, bringing a regulatory environment into place not just for the benefit of borrowers — although I think that is the key public interest in having this legislation, because they have been without redress when they were wronged — but also for the industry to make appeal, and undoubtedly, they will.

I wonder if the minister could describe for me whether the Business Practices and Consumer Protection Authority has in place notices and provisions for allowing licensees to appeal decisions. Can he assure the House that there are standard practices around notice of doing that and publication of findings and those kinds of things? I just want to make sure the capacity is there within this authority to deal with a new industry that it's going to be charged with giving oversight to.

Hon. J. Les: I just want to be clear here. In terms of the administration of this act or any other act, the Consumer Protection Authority adheres to all of the processes of natural justice, as outlined in the act and as, in fact, has been their practice since they have become the Consumer Protection Authority, but even prior to that, when they were the consumer services division of the ministry. Those processes are all available to anyone dealing with this authority, as indeed they should be.

With respect to resources, clearly this will be a new area of responsibility for the Consumer Protection Authority. They will need additional resources to ensure that they can conduct this responsibility fairly and adequately, and they will have the resources to do that.

This is an activity, of course, that is self-funded, so their resources are ultimately derived from licensing fees that are derived from the industry. In my view, that is as it should be so that this is not a burden on taxpayers. The industry itself pays for its administration.

R. Fleming: Under the self-funded model, I'm just wondering what the minister sees in terms of the appropriate level of staff and the costs that need to be recovered to have, I presume, a full-time director and some inspectors. I wonder what he sees as the staff complement that will do this job.

I've lost track of how large the industry is, but I know that British Columbia has the greatest number of payday loan shopfronts per capita in this province than in any other. Maybe it's 200 or 300 outlets. Maybe it's more. But those determinations have to be made.

I'm wondering if the minister can assure the House that there will be a full-time director, that there will be full-time staff and can maybe give us an idea of how many there will be under this self-funded model.

Hon. J. Les: In the development of this legislation, obviously we consulted widely, including consultation with the Consumer Protection Authority. They are confident that they can administer this legislation with some additional staff, obviously, but with a fee structure that would support these activities. Of course, through the administrative agreement that the ministry has with the Consumer Protection Authority, we can ensure that they deliver effective enforcement of this legislation on an ongoing basis.

I think the structure is there. The resources will be made available to ensure that we can implement this legislation and enforce it appropriately.

R. Fleming: Well, I certainly hope so. I think we've seen with the private post-secondary education sector, for example, that an authority was set up there, and in many people's opinion, there simply isn't the capacity to inspect and accredit those institutions.

It all comes down to the staffing and the organization and its ability to give oversight. It hasn't been adequate in that case. So I'll take that as a to-be-determined response. I know the minister has an interest in seeing it be as effective as possible. That requires resources, and that will determine the licensing fees.

There already are some tendencies underway because of technology and.… Perhaps there will be when we finally have some regulations on what kind of rates can be charged to borrowers. The cost of business will be changing in B.C. I wonder if the minister has any thoughts…. I don't think this legislation contemplates a shift to Internet-based payday lending.

I'm not looking for comments on the bill, per se, but maybe on the background on your way to it. I know he's consulted widely about what trend he sees in that regard and what ability he may have to ensure that, if that were to occur, consumers are just as adequately protected there as if they were to sign a paper contract in a payday lending storefront location.

Hon. J. Les: Actually, the member suggested that we might be slightly off line in having this discussion, but we're actually not off line. It is contemplated in the bill, but it's in a later section of the bill. I don't mind referring to it now, however.

It's in subsection (9)(j) where we specifically refer to "respecting loan agreements between borrowers and payday lenders that are not entered into in person." That contemplates a transaction entered into through the use of the Internet. We are clearly contemplating that. We have consulted with Internet lenders, and we intend through regulation to address that to the maximum extent possible.

I think the member will understand and appreciate that this is something where you actually need to proceed by regulation because that environment changes so quickly. We need to be relatively nimble to respond to changing circumstances. So, while that is a volatile environment to a degree, we certainly are contemplating attempting to regulate that and, again, provide some measure of protection for consumers in that arena as well.

R. Fleming: I wonder if the minister could just build on that. In discussions and briefings he's no doubt had, are there some challenges around dealing with an industry that does business this way over the Internet in terms of out-of-province operators potentially building a customer base here, but also in terms of the authority making findings where there are complaints, where you have electronic documents or things that need to be reconstructed?

I wonder, if there are some things that have been highlighted or brought to his attention, whether he could share that with the House this morning.

Hon. J. Les: The member raises, of course, some interesting questions. Transactions that are conducted on the Internet are, to a degree at least, new territory when it comes to these kinds of arrangements. But what is important to recognize is that what we're contemplating here is perhaps a lender who is located, let's say, in the Caribbean somewhere, but the customer is located in British Columbia. The customer is entitled to expect British Columbia law to protect them.

So if the lender does not abide by British Columbia legislation, they are not entitled, then, to expect British Columbia law to help them in any way recover their loan.

It's clear that it's going to be difficult to enforce against a company that is located in a Third World Caribbean country, for example, where essentially no law applies, but we still get to administer the law here in British Columbia. We still get to protect our consumers according to British Columbia law, and we still get to continue to deny the protection of the law for those who choose to carry on unacceptable business practices.

R. Fleming: I think there are a lot of scenarios in that type of a business environment where B.C. consumers could not be protected as the act would like them to be.

Let's use the example that the minister just talked about — a Caribbean-based payday lending operation lending to B.C. consumers. If they were violating any number of sections of this act around disclosing the person's rights or failing to honour repayment before the loan had become due, would it be the case that the director could somehow take action or sanctions against them and prevent them from making loans in B.C.?

I'm just wondering how the challenges around enforcement have been discussed or contemplated in his ministry.

Hon. J. Les: This discussion we're in at the moment is, to a degree at least, somewhat hypothetical. I'm happy to engage in it because it is important to contemplate the margins of where this might go.

We have seen, through other enforcement mechanisms that government undertakes from time to time, that we have a good degree of international cooperation around these things. I'm thinking, for example, of telemarketers, where we've had a lot of cooperation with American authorities and others to bring people who engage in shady practices to justice.

Our own civil forfeiture legislation that we introduced just a little over a year ago is already enjoying good cooperation between ourselves and American and other Canadian jurisdictions as well.

That will be helpful here too. But again, I return to the notion that in this particular case, if someone makes a loan available to a British Columbian and that person making that loan does not comply with British Columbia legislation, they will not be able to rely on British Columbia legislation to enforce repayment of that loan.

The recipient of the loan will in fact be able to rely on our legislation to limit — in some cases, seriously limit — the amount of money that might be repayable. For example, there will be provisions that limit the amount of money to be repaid to the principal only, with no interest whatsoever.

That is how I think British Columbians are entitled to rely on British Columbia law. Lenders who do not comply with British Columbia law, relying on the fact that they are remotely located through the Internet, will not be entitled to rely on British Columbia law to help them engage in their illegal schemes.

R. Fleming: I just want to ask the minister about fines and penalties, and what he would see as an appropriate maximum penalty for somebody who has had a number of complaints that were then found to show a systematic pattern of doing business against the main intent of the act and the regulations around fees.

Hon. J. Les: In terms of enforcing the act, of course, the Consumer Protection Authority will have a variety of tools available to it. I would direct the member's attention to part 10 of the Business Practices and Consumer Protection Act. There's quite an array of sanctions and other penalties that the director will be able to utilize.

Perhaps slightly more specifically in terms of compliance and enforcement, there are a number of mechanisms that are available to the authority that I'd just like to list.

First of all, they can refuse, obviously, to issue a licence. They can place conditions on a licence, or they can rescind a licence.

In the process of coming to conclusions as to whether a licence should be rescinded, for example, they can investigate complaints. They can enter onto a business. They can take copies of documents. They can hear witnesses.

They can make compliance orders, which in some cases can lead to freezing property or obtaining injunctions, and they can impose progressive administrative penalties up to a maximum of $50,000. I think that is a significant deterrent.

R. Fleming: I thank the minister for the response. What we hope we don't see is a reluctance, where there are clear violations, to enforce those kinds of penalties.

I note, for example, that the Degree Authorization Act allows up to $100,000 fine per offence. There have been many offences clearly documented in written findings, and there has never been a single fine levied by the government.

I hope it's not the case, where there are payday lenders quite egregiously violating the law, carrying on as if business is as usual and this act never existed, that the government won't be afraid to use those powers at its disposal.

I wanted to move on to a small subsection in this part of the act where it discusses the application of part 6.1 to savings institutions. We talked a few minutes ago about the Financial Institutions Commission and why the minister has chosen the Business Practices and Consumer Protection Authority to be regulating the payday lending industry. I just wonder if this clause, that part of the act doesn't apply to savings institutions…. It refers to the various borrowers' rights listed above it, the remedies that are available and what the lender must provide to the borrower in advance of that loan contract.

I'm just wondering what the thinking is behind not having this apply to savings institutions. Is it the case that credit unions are already regulated in another way where they have to disclose virtually all of these things when they do a loan product similar to this? I'm just wondering if the minister could enlighten me on that.

Hon. J. Les: I appreciate the question. What we did not want to do in this legislation is inadvertently capture other institutions that in the normal course of their business might provide credit that looked like a payday loan. What this legislation contemplates is the borrowing of money in amounts of no more than $1,500 and for a period of time no longer than 62 days. If a credit union were to make a loan of a similar description available to one of its clients in the normal course of doing business, that would then not necessarily make it, at all, a payday loan institution — obviously not. So we wanted to be sure that they were not inadvertently caught up in that by virtue of the definition of a payday loan.

However, if a financial institution such as a credit union did actually expressly want to get into the payday loan business, they would have to be licensed under this legislation.

R. Fleming: I thank the minister for the response. I was wondering about that, and I think that covers it. Of course, most people who take payday loans would probably prefer to have a generous overdraft on their accounts but aren't given one. So I think there probably are some alternatives. Now that there is a legal framework, or will be one, they may be interested in creating products that are between an overdraft and a payday loan of some kind.

I wanted to ask the minister about the section that gives details about what rights must be known to the borrower and what must be contained on the contract document around addresses, names of businesses, signatures and all of that. There isn't any provision that the form itself, which is probably stapled to the receipt that the borrower takes….

There isn't any provision that there be contact information for the Business Practices and Consumer Protection Authority itself. I think it might be a really good opportunity for…. While you're regulating what the form must have at a minimum and what the rights of the borrower are, it might actually be good to direct them to the place where they can make an inquiry or even lodge a complaint, if they feel they're being wronged.

I wonder if the minister would take that under advisement and include it in this section.

Hon. J. Les: I appreciate the comments of the member in that regard. I think we could usefully include that information on the appropriate documentation.

The legislation actually gives us the ability to require that to be done under section 112.06(2)(t), where it says we can require "any other term, information or statement that may be prescribed under section 197.1(1)(i)."

The ability to do that is there. I think that is a reasonable suggestion that we will take into consideration.

R. Fleming: I think that's a good assurance. I don't need to propose an amendment to make sure that's done. It clearly is in that subsection (t). Obviously, one of the things that this authority is going to work closely with the industry on is exactly coming to a common form the industry must use. I'm sure that will get done when that work is arrived at by the authority.

I did want to propose an amendment in this section, however, to subsection 112.05(1).

R. Fleming: If I may, I will motivate briefly on this. I think one of the things that the provinces that have been sitting at the table working with the federal government to bring some order and ability to regulate this industry…. There was always some hesitation that we would have ten responses to the industry and that there would be a patchwork around the country. Some provinces have not yet arrived at legislation like we're debating today, and some already have.

Here we are. This is quite a departure from Manitoba, which is further ahead than British Columbia, where they have included 48 hours as the provision in the related section to this. I think B.C. should also follow Manitoba, because as all the western Canadian provinces and provinces in the rest of Canada arrive at where B.C. is — and those that have gone before us — commonality does have its advantages.

The additional reason is that, quite simply, when we talked in second reading, we talked about who uses payday loans, what vulnerabilities they have as consumers. This is a special group of British Columbians who do not have a recourse or ability to use other credit products that provide much, much better terms for them.

In some cases, there are circumstances that those individuals find themselves in, where they're seeking payday loans that are not desirable. There are some sad circumstances in some cases, and I think we should, as Manitoba has, afford an additional day of sober second thought to allow that borrower to cancel and fully refund the lender in our legislation.

Hon. J. Les: Well, speaking against the amendment, let me just make a few observations. The member opposite has held up Manitoba as being the national standard. As a matter of fact, they are the outlier. The provinces of Saskatchewan and Nova Scotia, for example, the other two provinces that have already established these provisions, have the same provision as British Columbia has in its proposed legislation. I think it's important to note that.

If members will look at the clause the way it is written, yes, we do set the standard that the loan may be cancelled "at any time before the end of the next day," but we go on to say "or before the end of any longer period that may be prescribed in the regulations."

What we have done is go with the majority of other provinces that have already established this legislative requirement, but we have also given ourselves the flexibility to change it by regulation should practice show that that is advisable.

I'm not saying flat out to the member opposite that we may never need to change it, but what I am saying is that if experience shows that we should, we will have the ability to do that.

So in that context, I suggest the amendment is not necessary, and therefore I'm opposed to it.

R. Fleming: I'd like to just ask the Solicitor General about the regulations that will come into effect. We've discussed this morning some of the major concerns and what would be desired to make a fair and balanced environment for this industry to operate in and for the consumer protections that we want to have in place for the borrowers.

I mean, in some cases we are going into uncharted territory here. We will want to review things. He just said that he voted against the higher standard for the borrower's right to repay without penalty the loan by an extra day but has suggested that there is a mechanism, if that's warranted, for him to suggest that that be done later.

I note that Manitoba has a provision to review the regulations within three years. Obviously, under their system, as I understand it — under the utility commission that is charged with the responsibility there — that would probably mean a new round of hearings to hear from all the stakeholders and hear from the industry, the public, etc.

I'm just wondering if there's any mechanism by which the Solicitor General can assure us that we regularly hear updates on how this legislation is performing — that there is feedback, that the authority is publishing its findings, giving British Columbians an indication and an assurance that the act is working as it was intended — and if the Solicitor General could just tell this House how that might be done.

Hon. J. Les: I appreciate the member's interest in the question of accountability and how the legislation is going to work and what mechanisms might be available to adjust the legislation if that's necessary. There is, I think, a significant amount of flexibility built into this legislation so that as market conditions change or as business practices change, we should be able to adjust to those changing conditions on an ongoing basis.

The Business Practices and Consumer Protection Authority is required to report to government on an annual basis, and they obviously will be required as part of that report to comment on how they are doing with respect to the enforcement of this legislation.

Obviously, government always has its ear to the ground and hears constantly from people who are involved in these and other transactions. If there is a shortcoming in consumer protection, that is one area where we hear from the public with great regularity. I suspect the member opposite also will play a role in terms of defining any shortcomings that might become apparent as this legislation is applied.

I think we have a myriad mechanisms in place to monitor the success of the legislation and compliance with its provisions. As I've said, the legislation and the associated regulations are sufficiently flexible in terms of the ability to change them that I think we should be able to respond successfully to the challenges that this industry might confront us with.

Hon. J. Les: I move that the committee rise and report the bill complete with amendment.

Bill 27, Business Practices and Consumer Protection (Payday Loans) Amendment Act, 2007, reported complete with amendment.

Bill 27, Business Practices and Consumer Protection (Payday Loans) Amendment Act, 2007, read a third time and passed.

Hon. G. Abbott: I call committee stage debate on Bill 28, intituled Securities Amendment Act, 2007.

The House in Committee of the Whole (Section B) on Bill 28; K. Whittred in the chair.

L. Krog: This section changes the definition of both "forward-looking information" and "material fact." I'm just wondering: how does this harmonize with other provinces? Is it exactly the same definition as used in other provinces, and how many provinces are we talking about?

Hon. W. Oppal: This definition coincides with and harmonizes with all other jurisdictions. I should state that the underlying philosophical basis of this legislation is to harmonize with all other jurisdictions. We, in fact, have entered into a memorandum of understanding with all jurisdictions with the exception of Ontario to harmonize our legislation. So our definitions will coincide with other jurisdictions.

L. Krog: The definition, as it relates to material fact, changes from, I gather, a fact that significantly affects to a fact that would "reasonably be expected to have a significant effect." I take it, then, that Ontario is not on board. In that sense is it simply because they haven't got around to amending their legislation, or in fact are we going to end up with nine jurisdictions, arguably, across the country, provincially speaking, and one odd person out, which happens to be the most substantial province in the dominion?

Hon. W. Oppal: Ontario is on board as far as this definition is concerned. When I said that Ontario was not on board, I meant that they were not on board as far as the memorandum of understanding is concerned. The passport process and the harmonization process will be integral parts of this bill.

L. Krog: This section, as I understand it, will allow a member of the commission who conducted the investigation to create a report and sit in the hearing as long as they have consent from the parties involved, but otherwise they would not be entitled to do so.

I gather in the past that the commission, in a sense, could act both as prosecutor and judge. I'm wondering if that is, in fact, the effect of this section so that if you act as prosecutor, so to speak, or have done the investigation, you can now sit on the panel as long as the parties consent.

Hon. W. Oppal: What this section does is it permits a commissioner to sit on a hearing even though that particular commissioner has on an earlier occasion issued a freeze order on the assets or whatever else may be related to the transaction. It speeds up the process so that the same commissioner could deal with the matter.

Hon. W. Oppal: This section, section 7(4), permits a commissioner to sit on a hearing even though that particular commissioner has made an order or has commenced an investigation in relation to the same matter as long as the parties consent. The intent of this is to facilitate the process.

L. Krog: It has certainly been suggested that there should be an entirely separate function to the investigative, or prosecutorial, function and the hearing function. I'm just wondering: does this section and the change proposed align us with other jurisdictions in Canada, or is this simply an improvement for British Columbia's practice?

Hon. W. Oppal: I can say that the province of Ontario has similar legislation. I would expect that other provinces would have a similar provision, although it isn't something that I can say with precise accuracy. As I said a moment ago, the purpose here is to harmonize our laws with other provinces.

L. Krog: Again, my understanding is that this section is going to harmonize with other Canadian jurisdictions, and I'm just wondering if the Attorney General can outline: does that include Ontario? Does it not include Ontario? What other jurisdictions does it include?

Hon. W. Oppal: This is a part of the harmonization process. The amendment will come into effect at the same time as a new national registration rule which was published for comment in February of this year.

L. Krog: I'm just wondering if the Attorney General can explain the effect of section 12 in terms of its expansion of prohibitions or regulation.

Hon. W. Oppal: What this section does is it repeals and replaces section 55. It broadens a prohibition against representing that the commission has approved a registrant, a security or an issuer by an issuer's disclosure to the list of prohibitions. It's to prevent a prospective wrongdoer from representing to an investor that the commission has given its endorsement or approval when it registers a person and issues a receipt for a prospectus or reviews an issuer's disclosure.

The reason for that is that the commission routinely reviews continuous disclosure material. The prohibition would cover this aspect of its regulatory activities. This amendment provision is similar to a provision contained in the 2004 act.

L. Krog: Just so I am clear in my understanding of what this actually does. Essentially, it says: "Look, you can't go around saying the commission's given us the stamp of approval." But what exactly does the commission do, then, apart from taking the name of an individual? Is there anything other than that?

Hon. W. Oppal: I think that's a good summary. That's a concise summary of what this section states.

L. Krog: Just so I'm clear, then. I take it that if one is a person who would be making these kinds of representations on their behalf, all you've got to do is register.

Is there any investigation in regards to this person? Is there any prohibition? If there is no prohibition, for instance, and yet the commission in theory could investigate fairly easily and determine that a person was not a person who should be engaged in this kind of business at all, is there any way of stopping that?

Hon. W. Oppal: What this says is that the import of this is that by virtue of registering something doesn't mean that the commission is approving it. That's really what it is.

L. Krog: I'm wondering if the Attorney General can explain the effect of section 13, which replaces section 57. How does it improve, and again, how does it jive with other jurisdictions in Canada?

Hon. W. Oppal: This repeals and replaces section 57. The current section 57 prohibits market manipulation and fraud within the province. The current section 57.1 prohibits market manipulation outside the province by persons situated in the province.

This provision or these provisions were adopted because of a decision of the Supreme Court which found the former single provision ultra vires. The decision was later overturned, so it's no longer necessary to separate the two provisions.

The new section does not make any substantive changes and is adapted from section 27 of the 2004 act. It's harmonized with similar provisions in Alberta and Ontario.

L. Krog: Noting the hour, I move the committee rise, report progress and ask leave to sit again.

Committee of the Whole (Section B), having reported progress, was granted leave to sit again.

Hansard Services publishes transcripts both in print and on the Internet.
Chamber debates are broadcast on television and webcast on the Internet.
Question Period podcasts are available on the Internet.