Canadian Payday Loan Law Receives Royal Ascent
By Paul RizzoPayday Loan Writer
Canadian Bill C-26, a law allowing individual provinces to cap interest rates on faxless payday loans, received “Royal Ascent” on May 4.
When the Senate and the House of Commons have both passed a bill in the same form, the Governor General gives the bill Royal Assent on behalf of the Crown and it becomes an Act of Parliament and a Statute of Canada.
Bill C-26 is designed to exempt payday cash loans from criminal sanctions in order to facilitate provincial regulation of the industry. The exemption applies to payday loan companies licensed by any province that has legislative measures in place designed to protect consumers and limit the overall cost of the loans.
Stan Keyes, President of the Canadian Payday Loan Association (CPLA) said his group has been working with governments for three years to secure regulation that balances consumer protection with a viable, competitive quick payday advance industry.
“We will now work closely with all provinces to secure good regulation for the industry that allows responsible and serious lenders to continue to provide this important service in a competitive environment while also shutting down the worst business practices and highest fees that hurt consumers,” Keyes said.
The CPLA saw its membership decline rapidly after a number of members came to suspect the group was supporting regulations that would secure the future of large companies at the expense of independent operators.
Canadian payday loan operator Rentcash supports the new law but urged provincial regulators against creating monopolies through rate caps that will distort the market.
“Rate-setting measures must not give competitive advantage to one company over another,” said Gordon J. Reykdal, Chairman, President and CEO of RentCash. “Rate-setting for financial services is highly unusual in the Canadian market place and payday lending is a new and growing industry. If regulators get it wrong, they will limit competition and restrict options for consumers.”
According to CPLA, more than 2 million Canadians use an online payday loan every year. CPLA members must adhere to a strict code of best business practices overseen by an independent compliance and integrity commissioner. The group claims this sets CPLA members apart from other lenders in the industry.
Opponents of the new law say it will result in a patchwork of different laws and regulations, and a lack of uniformity in enforcement.
The battles at the provincial level have already begun. British Columbia introduced Bill 27, the Business Practices and Consumer Protection (Payday Loans) Amendment Act. British Columbia payday Loan Association (BCPLA) spokesperson Kevin Isfeld criticized government officials for introducing the no faxing payday loan legislation without first gathering the facts.
“This legislation contains many elements that are bad for consumers and industry operators, including provisions to regulate third-party service providers and the retroactive application of fines that could put many legitimate operators out of business,” said Mr. Isfeld. “This government has conducted no direct consultations with BC operators. Our members are angry and concerned.”
