Manitoba in spotlight over payday loans move
- PUBLICATION: Winnipeg Free Press
- DATE: Wednesday, May 14, 2008
- PAGE: B3
- SECTION: City
- BYLINE: Bruce Owen
Manitoba has become the battleground for the future of the payday loan industry in Canada.
The fight is over a recent decision by the arm's-length Public Utilities Board to regulate the quick-loan business in Manitoba and cap what they can charge customers for borrowing cash.
The first salvo was fired by the national group that represents Canada's payday loan industry.
The Canadian Payday Loan Association has filed for a reconsideration of the April 4 decision by the PUB to cap the maximum cost of credit at 17 per cent for loans up to $500; 15 per cent for $501 to $1,000; and six per cent for loans between $1,000 and $1,500.
The CPLA said the industry did not have a "meaningful opportunity" to respond to how the changes will affect its members.
In a May 2 filing to the PUB the CPLA also wants a review of how the PUB's decision will affect average loan sizes, store volumes and lenders' operating costs.
At the same time The Cash Store Financial Services Inc. has served notice in the province's highest court that it wants to appeal the PUB's decision. In court documents The Cash Store says the PUB exceeded its jurisdiction in capping lending rates and if its decision stands, smaller quick-loan companies will be put out of business.
It also wants the court to hear the appeal because Manitoba is the first province to regulate the industry and its decision will be felt across the country.
A tentative hearing date is set for May 29. However, it may be postponed if the PUB accepts the CPLA's request.
The province, meanwhile, is pushing ahead with its plans to clamp down on the industry known for its high interest rates and service charges.
"We believe the regulatory framework put in place is good balance between protecting consumers from high fees and potential abusive practices while allowing payday loan companies to continue to operate," a spokesman for Finance Minister Greg Selinger said. "There is a process at the PUB for appeal and they have the right to follow this process."
The Manitoba Consumer's Bureau continues to accept license applications from payday lenders, a new legal requirement.
Licences will not come into effect until the date of full proclamation of the amended act. Proclamation depends on designation from the federal government under the Criminal Code that allows the province to set interest rates for payday loans.
Designation and proclamation are expected later this year.
© 2008 The Winnipeg Free Press. All rights reserved.