CmB magazine cmba-achc.ca summer 2017 | 23
B
ill S-237 is currently in second reading in the Senate.
Introduced by New Brunswick Senator Pierrette Ringuette,
the bill seeks to amend the Criminal Code to reduce the
criminal rate of interest from 60 per cent to the Bank of
Canada's overnight rate plus 20 per cent for non-business
loans and mortgages. ese loans would include residential and consumer
mortgages, and mortgages for not-for-profit business purposes.
All credit which is advanced for business purposes would continue to
be subject to the current 60 per cent criminal interest rate rule, with one
significant exception: commercial and business loans under $1 million
would be completely exempt from the offence of charging a criminal rate of
interest. Senator Ringuette advises that, "In developing this bill and during
our debate last Parliament, it seemed clear that for small business loans,
those under $1 million, that the system is working pretty well and there
is no need to change the rate of 60 per cent. is allows businesses some
flexibility in negotiating short-term loans while maintaining reasonable
protection for small businesses."
So, in effect the bill would create three classes of loans subject to
different rules:
n
mortgages for consumer or household purposes would be subject to
a maximum interest rate of 20 per cent above the Bank of Canada rate;
n
mortgages for commercial and business purposes under $1 million
would have no limits; and
n
mortgages for commercial and business purposes over $1 million would
be subject to a maximum interest rate of 60 per cent.
e targets of the bill are credit card companies and utilities, and not
mortgage lenders. Senator Ringuette has observed that these organizations
"are raking in record profits off the backs of Canadians who are already
struggling to make ends meet."1
the Senate proposal to adjust
the criminal rate of interest is well
intentioned but fails to take into
account that sometimes high rates are
not only justified, they're necessary
By SAmAnthA gAle, CmBA exeCutive DireCtor
bestinterest
HigH Risk,
HIGH RatES
