Ontario is cracking down on payday loan companies in an effort to protect the province’s “most economically vulnerable,” but those in the industry suggest the Liberal government is misreading exactly who uses their services.
Legislation introduced today seeks to limit how much payday loan companies can charge Ontario customers and enhance consumer protection by licensing all operators.
If passed, the new law would see a cap placed on the total cost of borrowing and the establishment of an inspection and enforcement regime.
Operators will also be required to contribute annually to a public education fund aimed at ensuring consumers make informed decisions.
Government Services Minister Ted McMeekin says that cap will be set by an independent advisory board in the coming months.
McMeekin says the Liberal government is committed to addressing poverty in Ontario.
“We cannot and we will not allow people to take further advantage of those most economically vulnerable consumers in our society,” McMeekin said today.
But The Canadian Payday Loan Association says the majority of their customers don’t fall into that category.
The association says research it conducted last November, based on a telephone poll of 503 payday loan customers, suggests most of its clientele have household incomes equal to the general population of the province.
Last year, Ontario established rules requiring payday lenders to post large signs in their shops that outline all the interest rates and fees that apply to loans.
The federal government also granted provinces the right to set maximum interest rates for the payday loan industry.
Manitoba, British Columbia, Saskatchewan and Nova Scotia have all passed legislation to establish a fee limit.
Quebec is alone in banning payday loan outlets.
A series of articles concerning the payday loan industry, called A Matter of Interest, was published by the Toronto Star in 2004. Additional stories and editorials since have called for increased government control of the industry.