After dragging its heels for months, the Ontario Government has finally acted on a promise to do something about the huge rates charged by the payday loan industry in this province. As readers in Weston / Mount Dennis are painfully aware, these stores have proliferated in our communities and prey mainly on the poor, charging as much as 21% for a two-week loan; an eye-watering annual rate of 14,299%.
All of this was made possible in 2006 by the lovely Vic Toews, then Minister of Justice and Attorney General of the late lamented Conservative government. His bill made it legal for companies to charge more than (the then) usurious rate of 60% annually by giving provinces the power to regulate their own loan rates. Ontario opened the flood gates in 2008 and the payday loan industry hasn’t looked back.
The provincial Liberal government, instead of taking leadership, has listened to the Payday Loan lobby and rather than lowering rates drastically, they have decided to take the line of least resistance. They are quietly proposing that as of January 2017, rates for a two-week loan drop to 18% and then in January 2018, rates will become 15%, matching those of Alberta. While this is a good start, there is nothing in the legislation that addresses the dire plight of people forced to borrow at such appalling rates. 15% may sound better, but it is still 3,724% compounded annually.
Here is John Oliver’s take on Payday Loans.
Does Ontario have to go this route? Quite simply, no.
Quebec has taken the lead and they cap annual loan rates at 35%. As a result, there are no payday loan companies in that province.
That is the example that Ontario needs to follow and would help poor in our province dig their way out of poverty. In addition, some pressure on our hugely profitable banks and credit unions to provide loans to the poor would not go amiss.
If readers would like to comment on the proposed changes to the act, the Ontario Government isn’t making things easy. The contact page is here and a written submission may be sent via email or snail mail.
MPP Laura Albanese’s contact information is here and her constituency phone number is 416-243-7984.