Payday loans not just for low-income earners
- PUBLICATION: The Edmonton Journal
- DATE: May 15, 2007
Re: "Alternative to payday loans: Agency working to create payroll cards to give workers instant access to wages without pricey interest charges," The Journal, May 15.
It would be wrong to think that it is only society's disadvantaged who apply for payday loans.
A 2005 Ipsos Reid survey determined that payday loan customers represent a wide spectrum of Canadians. They do not predominantly fall within the lower-income brackets, and most have other options available to them, including lines of credit and credit cards.
Vibrant Communities Edmonton is to be congratulated for their work with lower-wage earners; however, it is incorrect to infer, as the article does, that lower-wage earners depend on payday loans to "tide them over." Research suggests that is not necessarily the case.
Governments have recognized that a payday loan is a legitimate financial product that has grown to be a mainstream financial service. That's a big reason why the federal government recently passed Bill C-26, which paves the way for provinces to implement regulation to protect the roughly two million consumers who use payday loans annually in Canada.
Provinces have been passing legislation to regulate payday lenders and to set a cap on fees and charges. Manitoba and Nova Scotia have already passed legislation and rate-setting hearings are next. B.C. and Saskatchewan have recently introduced legislation; New Brunswick has signalled its intention to bring forward legislation shortly, and Ontario has announced a public consultation that will lead to legislation later this year.
The Canadian Payday Loan Association (CPLA) represents responsible lenders who want both strong consumer protection and a viable industry. Our members adhere to a voluntary code of best business practices, monitored by an independent ethics and integrity commissioner. We believe an informed consumer is a better protected consumer, and we are committed to that principle.
CPLA will continue to work with all provinces to establish regulations that will allow responsible industry players to operate, while prohibiting bad business practices and excessively high fees for consumers.
Hon. Stan Keyes, P.C.
President
Canadian Payday Loan Association