The Legal Framework of Lending in Nunavut

Section 347 of the Criminal Code makes it a criminal offence to enter into an agreement or arrangement to receive interest at a "criminal rate." Following amendments enacted through the 2023 federal budget legislation and brought into force by the Criminal Interest Rate Regulations, the criminal rate is defined as an effective annual percentage rate (APR) exceeding 35%. The change took effect on January 1, 2025, lowering the long-standing threshold that had previously been expressed as a 60% effective annual rate.

Because section 347 is a federal criminal provision, it applies uniformly across every province and territory, including Nunavut. It sets the absolute outer boundary on the cost of most credit agreements, regardless of a borrower's risk profile.

Section 347.1 of the Criminal Code creates a narrow exemption from the section 347 ceiling for payday loans: advances of $1,500 or less, repayable within 62 days. The exemption is available only where the loan is made by a lender licensed under provincial legislation that regulates payday lending, and only in a province that the federal government has formally "designated" as having such a regime.

This is the single most consequential structural fact about high-cost short-term credit in the territory: Nunavut has not been designated under section 347.1 and does not have a dedicated territorial payday-lending statute. As a result, the section 347.1 exemption does not operate in Nunavut, and the general section 347 ceiling continues to govern short-term consumer lending in the territory. This distinguishes Nunavut from most Canadian provinces, which have enacted per-hundred-dollar cost caps under designated payday-loan regimes.

The banks that operate Nunavut's branch network are federally regulated under the Bank Act. The Financial Consumer Agency of Canada (FCAC) supervises their market-conduct obligations, including cost-of-borrowing disclosure, which requires lenders to express borrowing costs in a standardized APR so that consumers can compare products on a consistent basis.

Prudential oversight of federally regulated lenders sits with the Office of the Superintendent of Financial Institutions (OSFI). OSFI Guideline B-20 sets residential-mortgage underwriting expectations, including the minimum qualifying rate (commonly called the "stress test") that shapes who can qualify for a mortgage in Nunavut and elsewhere.

Nunavut inherited its statute book from the Northwest Territories when the territory was created in 1999. Territorial consumer-protection legislation governs disclosure in consumer credit transactions and provides courts with authority to reopen and grant relief from unconscionable credit bargains. Consumer protection is administered within the territorial government's community and government services function.

The practical effect is a two-track system: federal law sets the criminal ceiling and bank-conduct rules, while territorial law provides the local consumer-protection remedies and disclosure standards that apply to lenders operating in Nunavut.