With the federal election in full swing and Parliament taking a break, provinces are looking to take action on the matter of imposing new rules and regulations on payday loans by themselves. The province of British Columbia is working to clampdown on payday loan stores that charge exponential fees on borrowed amounts. The provincial government says that it is planning to reduce the maximum fees payable on a payday loan to $17 per $100 borrowed. This would be down from the current maximum of $23 per every $100 borrowed.
On Wednesday, the Ministry of Justice said in a statement that the province is committed to cutting fees. In fact, according to the Justice Ministry, this will be part of a much bigger review of the current crop of regulations that keep bad credit loan storefronts in check. The review will be developed by the end of the year.
“We are all about finding a happy medium. What’s good the consumer is good for us. Our goal is to find our customers a cost effective loan that meets their expectations of loan terms. In return we hope this customer will be satisfied enough with out service that they choose to come back if they need a loan in the future. It’s win-win.”
It should be noted that the provincial government did pass legislation to regulate the debt settlement industry, which modified safeguards for consumers and rules on fees. This will go into effect in the coming months.
This isn’t the first time that the province has pledged to tackle payday loans. In 2013, BC Liberal Premier Christy Clark promised to change the payday loan industry as part of her election campaign. However, the premier has failed to do anything meaningful since being elected.
Today’s litany of payday loan lending laws were instituted in 2009.
For years, payday loan businesses have been lambasted for supposed predatory practices that consist of exorbitant lending fees and intricate agreements that confuse consumers. Without provincial assistance, many municipalities across Canada have decided to rein in the industry.
The city of Hamilton is debating the merits of forcing payday loan lenders to get a license. City Council has been working over the past couple of months to introduce regulations that would perhaps limit the growth of bad credit loan establishments, citing consumers’ debt spirals and constant usage of these stores.
“My campaign office was across the street from one of these things, and I would see people regularly line up outside before they even opened,” said Hamilton City Councillor Matthew Green. “This is an embarrassment. This is our city’s shame in terms of what we’re allowing these companies to do.”
Last month, it was reported that an array of municipalities across the province of Alberta, including Calgary and Red Deer, are collaborating with the private sector and non-profit organizations to combat payday loans that they say come with 600 percent interest rates. Although legislation has been passed to protect consumers in regards to excessive interest rates, many of the rules are not enacted against the payday loan industry.
“I think in terms of protecting our at-risk citizens, our vulnerable citizens, the working poor, all orders of government have responsibility,” said Red Deer Mayor Tara Veer.
Edmonton has still yet to get on board with this initiative.