Burke applauds pay-day loan legislation;
- PUBLICATION: The Daily Gleaner (Fredericton)
- DATE: 2006.10.07
- PAGE: A8
- SECTION: NEWS
- BYLINE: CAMPBELL MORRISONmorrison.campbell@dailygleaner.com
New Brunswick Justice Minister T.J. Burke is eager for a new federal law that will allow the province to go after pay-day loan companies.
"The province of New Brunswick welcomes the news about the introduction of the legislation at the federal level. Once the legislation is passed at the federal level, the government of New Brunswick will implement a regulatory process for the pay-day loan industry in New Brunswick," he said in an interview Friday.
"Those regulations will ensure protection for consumers from poor business practices and excessive lending rates."
Several hours earlier, federal Justice Minister Vic Toews and Industry Minister Maxime Bernier introduced a bill to amend the Criminal Code and grant provincial governments the authority to regulate the industry, which has grown from nowhere in 1994 to 1,350 outlets today.
Section 347 of the federal Criminal Code makes it illegal to charge more than 60 per cent interest per year. However, it is aimed primarily at loan sharks and organized crime.
It proved ineffective at regulating pay-day loans that are usually for terms of one to 14 days and feature fees as well as interest.
For those provinces that establish a regulatory regime for the pay-day lending industry, the industry will be exempt from section 347.
Burke promised to work with the industry to develop the regulatory regime.
"The government will work with stakeholders and the Canadian Payday Loan Association. We are pleased with the introduction of legislation at the federal level," he said.
The Canadian Payday Loan Association also welcomed the federal bill.
"Today's legislation will ensure consumer protection and the ongoing viability of this important industry," association president Michael Thompson said in a statement.
"The federal government has played a vital leadership role in recognizing the importance of this issue and acting quickly to give provinces the authority to regulate."
The association represents about 850 of the 1,350 stores operating in Canada that make pay-day loans to two million Canadians a year.
It claims to have the "toughest" voluntary code of practices in the world.
In addition to New Brunswick, the governments of British Columbia, Alberta, Saskatchewan, Manitoba and Nova Scotia have all asked for the authority to regulate.
Fundy-Royal Conservative MP Rob Moore, the parliamentary secretary to the minister of justice, said the federal government was responding to the provincial demands.
"It is to cut down on loan sharking ... This was something the provinces were calling for, the industry was calling for, and this will allow New Brunswick to regulate payday lending arrangements in New Brunswick," said Moore whose job is to get justice legislation through Parliament.
"I think it is a great thing."
The federal New Democratic Party, which claimed ownership of the idea to regulate pay-day lenders, promised to support the government's bill.
"This is a victory for Canadians who have fought for regulation," said Manitoba NDP MP Judy Wasylycia-Leis in a statement.
"It's a vindication for the many working families who have come forward to share their personal stories. Finally, we will protect hard-working Canadians from financial ruin."