Legislation on Payday Loans in Canada Planned
By J.J. CameronPayday Loan Writer
The federal government in Canada is planning legislation that will allow provinces to place a tighter grip on the burgeoning fast cash loan industry.
According to The Ottawa Business Journal, the bill will give the provinces the power to cap the interest rates these companies can charge. Critics of the industry have described the rates charged on short-term online payday loans as "unconsciously usurious" and called for tougher regulation.
The Criminal Code makes it an offense to charge an interest rate of more than 60 percent a year. However, fees and interest rates on payday loans can often run much higher. Until now, no one has been much inclined to do anything about it.
In Canada, the average faxless cash advance is about $280 for ten days and costs about $57 in fees and interest charges, according to the Canadian Payday Loan Association.
Manitoba has led the charge for tighter controls on the industry, but Ontario is balking. It says the current Criminal Code provisions should be adequate to control payday lenders and doesn't see the need for provincial regulation.
Meanwhile, regular and no fax payday loan companies operate in all provinces except Quebec.
