1. Determine the maximum interest rate you will be charging: The maximum interest rate allowed in Canada and Ontario is 60% per year.
2. Make sure you follow all applicable laws: In Ontario, the Payday Loans Act (PLA) governs the payday loan industry. You must obtain a license from the government in order to operate.
3. Ensure you are compliant with privacy laws: You must ensure that any personal data collected is kept confidential and secure. This includes the use of appropriate encryption and other security measures.
4. Establish a fair repayment schedule: You must set up a repayment schedule that is reasonable for both parties. This should include a grace period, reasonable payment amounts, and any late fees that you may charge.
5. Offer customers clear disclosure documents: You must provide clear disclosure documents to customers in order to ensure they are aware of all the terms and conditions associated with the loan.
6. Offer clients a cooling-off period: In Ontario, you must offer customers a minimum cooling-off period of two business days after they enter into a loan agreement.
7. Have adequate risk management practices in place: You must establish and maintain adequate risk management policies and procedures to protect your business from any potential losses. This includes monitoring your Roll Rates (percentage of accounts rolling into the next stage of delinquency) and PCO's (potential charge-offs)
8. Establish customer complaint procedures: You must have a customer complaint procedure in place in order to address any issues or complaints your customers may have. Repeat business is good business!
Worried about being compliant? Watson Capital & Consulting helps payday lenders across Canada be complaint before they even get their first audit. Avoid paying the government penalties or even risk having your license suspended. Contact Preston Watson directly by calling 778-955-5644, send us a WhatsApp message to 905-906-5644, or email us via preston@watsoncap.ca. Consultations are free, so call us now!