Nova Scotia Rate Cap on Payday Loans will Protect Consumers

  • PUBLICATION: CNW
  • DATE: Thursday, July 31, 2008

HALIFAX, July 31 /CNW/ - Today's decision by the Nova Scotia Utility and Review Board (UARB) to cap the rates on payday loans will ensure a competitive lending industry which will protect consumers, said Canadian Payday Loan Association (CPLA) President Stan Keyes.

"Nova Scotia heavily relied on solid evidence and expert witnesses regarding the payday loan industry and payday loan customers," said Mr. Keyes.

"Today's ruling on rates recognizes the responsible, educated consumers that require access to this important form of credit."

In the decision released today in Halifax, the UARB set the maximum cost of borrowing at $31 per $100, inclusive of all expenses (including interest and other charges). The CPLA has been working closely with governments across the country to achieve regulation of the payday loan industry and ensure consumer protection.

"Today's ruling represents a ceiling on rates. It ensures that no loan shall ever cost more than $31 per $100, but most players will compete with each other to provide lower rates to benefit consumers requiring this service," said Mr. Keyes.

Key conclusions of the Nova Scotia UARB include:

  • Consumer satisfaction with payday loans: People who take out payday loans are satisfied with the costs they currently pay (paragraph 53)
  • Incorrect reports of excessive fees: Reports of excessive fees in the industry do not accurately reflect the real costs of a short-term loan
  • fees for short-term payday loans should not be compared to fees for annual loans (paragraphs 54 and 55)
  • Competition will protect consumers: Competition in a free marketplace is - and will be -- the most effective control on how much payday loan companies charge and will ensure consumer protection (paragraph 105, 112, 128 and 220)

The CPLA represents 20 responsible payday loan companies across Canada and has been actively calling on governments across the country for three years to introduce and pass effective payday loan legislation and regulation. The CPLA's extensive research and submission to the Nova Scotia UARB can be found at http://www.cpla-acps.ca/english/mediasubmissions.php.

Mr. Keyes was in Halifax today to receive the decision.

For further information: Hon. Stan Keyes, President - Canadian Payday Loan Association, (905) 522-2752 (office)