Loan rate well-known Expert testifies for Cash Store
- PUBLICATION: Halifax Chronicle Herald
- SECTION: Business
- PAGE: C5
- BY: Clare Mellor
- DATE: Saturday, January 26, 2008
Consumers aren't in the dark when it comes to what a payday loan is costing them, says a former Bank of Canada research adviser.
A recent Pollara survey found that Nova Scotia and New Brunswick payday customers expected to pay about $28 per $100 borrowed, which is within the range of fees they actually pay, says Kevin Clinton, an economist and expert witness for the Cash Store who testified Friday in Halifax at payday regulatory hearings.
"It seems to me that the customer knows how much this stuff costs," Mr. Clinton said in response to questions from Roland Deveau, chairman of a Nova Scotia Utility and Review Board hearing panel.
"They are as well informed as I am when I went and bought my wide-screen TV."
The regulatory board is one of the first in the country considering the terms and conditions of payday loans in Nova Scotia and could set a maximum rate that payday outlets may charge consumers.
The week-long hearings, stemming from changes to federal legislation that now allows provinces to regulate the burgeoning industry, wrapped up Friday.
Interveners, most of them payday industry representatives, will file their final arguments in writing to the board.
Halifax lawyer David Cameron was appointed by the provincial government as a consumer advocate at the hearings just a few weeks ago, when it became clear that no consumer groups were going to intervene officially.
In a letter to the board, Dalhousie Legal Aid Service says it didn't intervene in the hearings, on behalf of low-income Nova Scotians, not because of lack of interest, but because it lacked the funding and resources to do so.
It criticizes the lack of consumer representation at the Nova Scotia hearings, which are in stark contrast to the situation in Manitoba, where similar payday regulatory hearings are ongoing.
Mr. Cameron was appointed by the consumer protection division of the Nova Scotia government "shortly before Christmas, well after the deadline for intervener applications (and) the filing deadlines for evidence and information requests had passed," says a letter from the community development and law reform committee of Dalhousie Legal Aid to the board.
"As a result . . . significant gaps exist in the evidentiary record with respect to the practices of the payday loan industry in Nova Scotia, especially as they reflect consumer interests."
Mr. Clinton who took the stand for most of the day, advised the board to tread lightly with regulation and said the free market will keep pricing competitive among lenders.
On Friday, Mr. Clinton submitted some price quotes for payday loans, jotted down on a piece of paper.
The amounts for a loan under $300, obtained from sales agents at 10 payday stores, were obtained this week using Yellow Pages listings. The quotes show a range of fees from $15 to $31 per $100 borrowed.
While industry representatives sought to have Mr. Clinton's notes submitted as evidence, Mr. Cameron objected, saying there was no way of knowing whether the information was accurate or complete.
Mr. Clinton acknowledged that the numbers might not be completely accurate and agreed better information is needed for regulators in the future.