Abstract: Bill 72, Quebec’s new consumer-protection law, introduces a cap on non-sufficient funds (NSF) fees for non-bank lenders, limiting them to roughly $2, while banks could until recently charge $45. Now, with the federal government capping bank NSF fees at $10, the disparity remains—Quebecers face a two-tier system where one set of lenders can charge $10 and another only $2. This uneven application distorts the market, forcing smaller lenders to absorb unrecoverable costs while encouraging consumers to default when the penalty is trivial. Harmonising the rules at $10 across the board would better balance consumer protection with financial inclusion.

When a Quebecer’s payment bounces, the punishment depends less on the behaviour than on the lender. Under Ottawa’s new rules, banks may charge no more than $10 in NSF fees. But under Quebec’s Bill 72, non-bank lenders are capped at about $2—the amount their own bank charges them. The same event, two regulators, two rules.

The inconsistency is striking. Processing failed payments is not free: it requires staff time, systems, and risk management. For decades, the $45 fee broadly reflected those costs. Trudeau’s government recognized this by mandating a sharp reduction for banks—but it still allowed a meaningful deterrent at $10. Quebec’s cap at $2, by contrast, trivializes the cost of default and shifts millions in unrecoverable expenses onto non-bank lenders.

Consumers won’t benefit in the long run. If the penalty for default is negligible, more borrowers will take the risk of letting payments slide. Delinquencies rise, margins shrink, and non-bank lenders—who often serve households excluded from mainstream credit—will retreat. In time, borrowers will face fewer choices and higher borrowing costs.

The NSF provision highlights the dangers of regulatory inconsistency. One regulator, the federal Department of Finance, is setting a nationwide standard for banks. Another, Quebec’s Office de la Protection du Consommateur (OPC), imposes tighter rules on non-banks. The result rewards incumbents and penalises challengers.

Other elements of Bill 72 carry similar risks. For example, limiting membership or renewal fees on credit cards to once per year may seem protective, but in practice could make smaller credit providers’ models unviable. That would leave vulnerable borrowers with fewer regulated options and greater exposure to unlicensed, predatory lenders—the very outcome the law seeks to prevent.

Not all of the law is misguided. Requiring permits for revolving credit contracts is sensible, and tougher oversight of rogue actors is overdue. But lumping responsible, regulated firms in with bad actors undermines competition and financial inclusion.

The fix is straightforward: harmonise NSF rules at $10 for all lenders, bank and non-bank alike. That way, consumers are protected from excessive fees, lenders are not unfairly penalised, and the market operates on a level playing field.

Five Key Ideas

1. Uneven Regulation: Ottawa capped bank NSF fees at $10, but Quebec still restricts non-bank lenders to $2, creating a two-tier system.
2. Market Distortion: The discrepancy shifts costs onto non-bank lenders, rewarding incumbents and penalising competitors.
3. Perverse Incentives: Minimal penalties encourage consumers to default more often, raising delinquencies and risk.
4. Reduced Credit Access: Non-bank lenders, who serve underserved borrowers, may retreat from the market, leaving vulnerable households with fewer regulated options.
5. Policy Fix: Harmonising NSF rules at $10 across all lenders would protect consumers without distorting competition.