Winnipeg Sets Cap on Payday Loans, Aims to Control Payday Advance Fees
By J.J. CameronPayday Loan Writer
NDP MP Pat Martin (Winnipeg Centre) isn’t a huge fan of the payday advance industry. Of lenders that provide these loans, he said:
“These people should be dragged into the street and shot.”
This sounds a bit extreme. Fortunately, Finance Minister Greg Selinger’s proposed legislation strikes a balance to ensure payday loan companies aren’t run out of business, while protecting the consumer from being gouged from excessive interest.
Here’s what the bill proposes: The typically exorbitant fees charged by payday loan companies will be capped and extra charges for renewing a loan will be prohibited under new legislation introduced by the province yesterday to control this industry.
Once the province’s bill is passed into law, the Public Utilities Board (PUB) will have the authority to set the maximum cost of credit that lenders can charge for payday loans, said Selinger.
“We’ve decided to do it through an arm’s-length body, to de-politicize it,” said Selinger, noting the fees will be set after the public and interested parties have had a chance to speak at a public forum.
The payday loan companies will also have to be licensed and bonded and borrowers will have to receive a documented warning about the high cost of the loan - a move aimed to edcuate Canadians that seem to be unaware of the costs of payday loans.
Borrowers will also not be able to borrow money on wages they haven’t earned yet and will have a 48-hour cooling off period to cancel the contract without penalty.
“We do not see this as putting the mainstream payday lender out of business,” said Selinger, noting there is a need for the service in many communities.
Under the legislation, the Manitoba Consumers’ Bureau will have the right to inspect records and suspend an operator’s licence if they aren’t following the regulations. Plus, if there is evidence that payday loans are offered through an unlicensed agency, the bureau can shut it down.
May 8th, 2006 at 6:44 am
[…] The Canadian Payday Loan Association has worked with federal and provincial governments to implement regulations for all payday advance lenders. We now see signs that governments are moving in the right direction. Federal Minister of Justice Vic Toews said last month that he would "seriously consider" a proposal by the government of Manitoba to quickly regulate the growing payday loan industry. […]