Ontario Government lets payday lenders off the hook

From Richmond Times Dispatch.
From Richmond Times Dispatch.

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.

 

Payday loan shops face push

City Council is considering a motion to space out payday loan shops. The motion would force money stores to be separated by at least 400m and increase the licence fees from $1000 to $3000. The motion was seconded by Frances Nunziata.

There are at least 10 cheque-cashers and two pawn shops in Weston. This bylaw would not affect them; it will only affect new businesses. 

The law will reduce the number of cheque cashing businesses, but will likely enrich the existing owners by reducing competition.

The motion would also ask the province to reduce the interest rate to 35%. It will also build encourage credit unions and banks to set up (or not leave) priority communities, like our own.

Finally, it will ask the feds to look into a postal bank—an idea recently championed by ACORN in Weston.

Scotiabank gives Weston one last wedgie.

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Right at the corner of Weston and Lawrence sits a unique wedge shaped building that has been there for decades. On July 22nd, the occupant, Scotiabank, will be pulling out of 1885 Weston Road in an attempt (one presumes) to maximize shareholder value. This in spite of earnings up a healthy 6% over the first quarter of last year.

Our local politicians can blather all they want about the evils of payday loan companies in the area but here is a profitable, successful corporation demonstrating that it cares so little about its customers, they can now do their banking at the next closest branches at Weston and Eglinton or Lawrence and Keele – a hefty hike or a $6.00 round trip by TTC. These are the same compassionate folks who recently cut hundreds of jobs in Alberta.

For those of us who don’t use Scotiabank or who do their banking electronically this is probably not a big deal. For low income folks, this is another push towards payday loan companies. Many seniors are not comfortable banking by computer and will be severely inconvenienced by this closure. In addition, as a sign of confidence in Weston’s emergence from decades of neglect, this is a terrible setback. No doubt yet another payday loan company will open in its place.

If I was Councillor Frances Nunziata, MPP Laura Albanese or our non-resident MP Ahmed Hussen, I would be in front of the branch waving placards protesting the closure – in fact I’ll be happy to be part of any such demonstration should any of these representatives wish to show their displeasure and shame Scotiabank for their vote of non-confidence in our community. Embarrassing Scotiabank is probably the only way to get any reconsideration especially if as a result, people decide to move their money to the remaining banks in the area; TD Canada Trust, RBC and BMO.

The Financial Consumer Agency of Canada is interested in hearing from customers who will be inconvenienced by this move: 1-866-461-3222.

If you would like to express your displeasure to Scotiabank directly, call 1-888-722-3970.

And finally, a quote from the lovely folks at Scotiabank:

Although our reach is global, our energies are focused on individual customers, employees, and shareholders, and on building a strong community presence.

Nunziata Pressures Payday Lenders

Mike Sullivan was no sooner out of his campaign office when this company set up shop at 1942 Weston Road.
Former MP Mike Sullivan was no sooner out of his campaign office when Cash Z way  set up shop at 1942 Weston Road.

Payday loan companies (PLCs) paint themselves as businesses that help out people in times of need. They also claim to help people with middle class incomes. Since the province legalized their brutal rates of $21 per loan of $100, PLCs have proliferated. Incredibly that loan rate in real terms is 120,000% annually. PLCs claim that the loan is only for a short period of less than a month and so actual interest paid is low. However, there is evidence that many people get deeply in debt by paying one loan off with another from a rival PLC.

Back in 2012, PLC front man (former Liberal MP) Stan Keyes claimed to WestonWeb that payday loan customers have a median income of $45,000.

Councillor Frances Nunziata is not a fan of Payday loan companies. Weston is littered with them and no doubt without victims customers they would go out of business. In the past she has tried to limit their proliferation with measures that would essentially harass them through inspections. Council at the time was unsupportive. It’s hard to go after a business that is operating legally.

MPP Laura Albanese is working on the problem from another angle but barring the province lowering the boom on companies charging such huge rates, (where are you Kathleen?) this City initiative seems to be the best alternative. The tactic tried successfully in other cities has been to limit the number of PLC stores in an area. Nunziata’s motion co-sponsored with Councillor Kristyn Wong-Tam and put before Council this month will aim to limit PLCs by legislating a minimum distance between them.

Read more in this Toronto Star article.