section 347(2)

INTRODUCTION AND BRIEF DESCRIPTION

This section defines criminal rate as an annual interest rate exceeding 60% on credit provided under an agreement or arrangement.

SECTION WORDING

347(2) In this section, "criminal rate" means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement.

EXPLANATION

Section 347(2) of the Criminal Code of Canada sets out the parameters for what is considered a "criminal rate" of interest. Essentially, any annual interest rate that exceeds 60% on credit that is advanced under an agreement or arrangement is considered criminal. The purpose of this section is to protect individuals from predatory lenders who might charge exorbitant rates of interest on loans, thus leading to a cycle of debt from which it is difficult to escape. By setting a clear threshold for what is considered unacceptable interest rates, the Criminal Code provides a means of prosecuting lenders who engage in this type of behavior. It is important to note that this section specifically refers to agreements or arrangements whereby credit is advanced. In other words, if someone borrows money from a friend or family member and is charged a high rate of interest, that would not necessarily be considered criminal under this section. However, if an individual borrows from a lender who charges a rate exceeding 60%, that could potentially be considered a criminal act. Overall, section 347(2) of the Criminal Code is an important tool in protecting individuals from predatory lending practices. It sets clear standards for what is considered acceptable interest rates and provides a means of prosecuting lenders who engage in unethical behavior.

COMMENTARY

Section 347(2) of the Criminal Code of Canada is a provision that aims to protect consumers from predatory lending practices through the establishment of a criminal rate of interest that must not be exceeded by lenders. The criminal rate is defined as any effective annual rate of interest that exceeds sixty percent on the credit advanced under an agreement or arrangement. The purpose of this provision is to prevent lenders from charging exorbitant interest rates that can trap vulnerable borrowers in a cycle of debt. This is particularly important because some borrowers may have limited options for obtaining credit, such as those with poor credit or low income. These borrowers may be more likely to accept high-interest loans out of desperation, which can have severe long-term consequences. The establishment of a criminal rate of interest helps to deter lenders from engaging in these kinds of practices by imposing criminal penalties on those who violate the limit. This provides a strong incentive for lenders to offer fair and reasonable interest rates to their customers, and helps to ensure that borrowers are not taken advantage of. It is worth noting that the criminal rate of interest is not a fixed number, but rather is calculated based on generally accepted actuarial practices and principles. This means that the rate may vary over time based on changing economic and market conditions, ensuring that the limit remains effective and relevant. Overall, this provision of the Criminal Code of Canada is an important tool for protecting consumers from predatory lending practices. By setting a limit on the amount of interest that lenders can charge, it helps to ensure that borrowers are not taken advantage of and that credit is offered on fair and reasonable terms. While there may be some debate over the specific level of the criminal rate, the principle underlying the provision is sound and necessary for protecting vulnerable borrowers.

STRATEGY

Section 347(2) of the Criminal Code of Canada imposes strict limits on the rate of interest that can be charged on loans. Violations of this section can be punishable by severe penalties, including fines and imprisonment. When dealing with this section of the Criminal Code, there are several strategic considerations that lenders and borrowers should keep in mind. One of the most important considerations is compliance. Lenders should take care to ensure that their interest rates do not exceed the threshold established by the Criminal Code. This may require careful calculation and documentation of interest rates and fees charged to borrowers. It is also important to ensure that all agreements and arrangements are clearly and unambiguously worded in order to avoid any confusion or misunderstandings. Another key consideration is risk management. Lenders should take steps to assess the creditworthiness of borrowers and to minimize the risk of default. This may involve careful screening of applicants, careful review of their financial histories and credit scores, and the use of collateral or other forms of security to guarantee repayment of loans. Lenders may also consider working with other financial institutions or partnering with third-party financial services providers in order to comply with Section 347(2) of the Criminal Code. Such partnerships can provide additional resources and expertise, as well as access to new markets and customers. Finally, lenders should be aware of the legal risks associated with non-compliance with Section 347(2) of the Criminal Code. Violators can face significant fines and penalties, as well as damage to their reputations and brand images. As a result, lenders should take care to ensure that all aspects of their operations are in compliance with Canadian law, including Section 347(2). In terms of strategies that could be employed, lenders may consider developing products and services that are specifically designed to comply with Section 347(2) of the Criminal Code. This could involve offering loans with lower interest rates or longer repayment periods, or developing alternative forms of financing, such as crowdfunding or peer-to-peer lending. Another strategy could be to collaborate with other lenders and financial institutions to establish industry best practices and standards for compliance with Section 347(2) of the Criminal Code. This could involve sharing information and best practices, as well as developing training and educational programs for lenders and borrowers. Ultimately, the key to success in this area is understanding the legal and regulatory framework surrounding Section 347(2) of the Criminal Code, and taking proactive measures to comply with its requirements. By doing so, lenders can build trust with customers and regulators, reduce legal and reputational risks, and establish themselves as leaders in the industry.