4. Criminal Interest Rate – Division 33

Qs & As

Part 4 – Division 33
Criminal Rate of Interest

Q. What changes is the Government proposing to the Criminal Code?

Under current law, there must be an agreement or arrangement to pay interest at a criminal rate of interest in order for a crime to have been committed, or a lender must have attempted to advance credit at a criminal interest rate by taking substantial steps towards committing the offence. The criminal rate of interest offence under the Criminal Code (section 347), would be amended to broaden the offence to criminalize the offering or advertising of credit at a criminal rate of interest of 35 per cent annual percentage rate (APR) or above.

Also, the Criminal Code would be amended to remove the requirement to obtain the consent of the Attorney General prior to commencing criminal proceedings related to the criminal interest rate.

Q. Why is the Government proposing changes to the Criminal Code?

The Government is proposing these changes to address challenges to the enforcement of the criminal interest rate. The amendments would broaden the offence to target conduct that occurs prior to entering into predatory lending agreements. Currently, some borrowers receiving loans at illegal rates of interest may be reluctant to come forward to law enforcement for a variety of reasons, which can hamper investigations and prosecutions. Given this challenge, these amendments would enable law enforcement to directly target illegal lenders by prohibiting offers or advertisements of loans at a criminal rate.

The proposed changes would also remove the requirement to obtain the consent of the Attorney General before commencing proceedings in order to reduce the procedural burden for law enforcement and Crown prosecutors. The intent of this change is to reduce barriers to prosecutions. Through consultations, stakeholders, notably, those in the consumer advocacy space, urged the Government to advance this amendment in order to reduce barriers to enforcement of the criminal rate.

Q. When will these Criminal Code amendments come into force?

This measure builds on the Budget Implementation Act, No. 1, 2023 amendments that would lower the criminal interest rate from the equivalent of 48 per cent APR to 35 per cent APR. These amendments will be brought into force, with associated regulations, on a day or days to be set by the Governor in Council. The removal of the requirement to obtain the consent of the Attorney General prior to commencing criminal proceedings related to the criminal interest rate would come into force 30 days after Royal Assent.

Overview

Part 4 – Division 33
Criminal Rate of Interest

Key Messages

Part 4 – Division 33
Criminal Rate of Interest

Clause-by-Clause

Part 4 – Division 33
Criminal Rate of Interest

Clause 336(1)

Clause 336(1) would expand the scope of the offence in subsection 347(1) of the Criminal Code (the Code) to include offers or advertisements of offers to enter into an agreement or arrangement at a criminal rate.

Clause 336(2)

Clause 336(2) would expand the definition of ‘credit advanced’ in subsection 347(2) of the Code to include credit that would be advanced if an agreement or arrangement – as offered, including in an advertisement– was entered into. This accounts for offers or advertisements of loans that have not yet been entered into.

Furthermore, the definition of ‘interest’ under subsection 347(2) of the Code would be expanded to reference charges and expenses that would be paid or payable if an agreement or arrangement was entered into. This accounts for offers or advertisements of loans that have not yet been entered into.

Clause 336(3)

Clause 336(3) would repeal subsection 347(7) of the Code to remove the Attorney General consent requirement to commence proceedings under section 347.

Clause 337

Clause 337 would replace a portion of subsection 347.1(2) of the Code to expand the payday lending exemption to also exempt offers and advertisements of offers to enter into a payday loan agreement.

Clause 338(1)

Clause 338(1) clarifies that references to the ‘other Act’ means the Budget Implementation Act, 2023, No. 1.

Clause 338(2)

Clause 338(2) is a coordinating amendment that specifies that if clause 611 of the other Act comes into force before clause 336(1) of this Act, then, on the day on which this Act comes into force:

Clause 338(3)

Clause 338(3) is a coordinating amendment that specifies that if clause 336(1) of this Act comes into force before section 611 of the other Act, then section 611 of the other Act is amended by replacing section 347.01 of the Code so that it enacts as follows:

Clause 338(4)

Clause 338(4) is a coordinating amendment that specifies that if section 611 of the other Act comes into force on the same day as clause 336(1) of this Act, then that clause 336(1) is deemed to have come into force first and all coordinating amendments in clause 338(3) would be made in this case.

Clause 338(5)

Clause 338(5) is a coordinating amendment that specifies that if subsection 612(1) of the other Act comes into force before clause 337 of this Act, clause 337 would be amended by adding paragraph 347.1(2)(a.1) to clarify that the total cost of borrowing for a payday loan does not or would not exceed the limit fixed by regulation. This accounts for offers or advertisements of loans that have not yet been entered into.

Clause 338(6)

Clause 338(6) specifies if clause 337 of this Act comes into force before subsection 612(1) of the other Act, then subsection 612(1) of that Act would be amended by replacing paragraph 347.1(2)(a.1) to clarify that the total cost of borrowing for a payday loan does not or would not exceed the limit fixed by regulation. This accounts for offers or advertisements of loans that have not yet been entered into.

Clause 338(7)

If subsection 612(1) of the other Act comes into force on the same day as clause 337 of this Act, then that subsection 612(1) is deemed to have come into force first and the coordinating amendments in clause 338(5) would be made in this case.

Clause 339(1)

Clause 339(1) provides that clauses 336(1) and (2) and clause 337 will come into force on a day or days fixed by order of the Governor in Council.

Clause 339(2)

Clause 339(2) provides that clause 336(3), which removes the requirement to obtain Attorney General consent to commence proceedings, comes into force on the 30th day after the day on which this Act receives Royal Assent.