Payday loan association welcomes new rules on P.E.I.
- PUBLICATION: CBC News
- DATE: Thursday, April 23, 2009
P.E.I.'s proposed payday loans act will balance consumer protection with a viable payday loan industry, says the Canadian Payday Loan Association.
Association president Stan Keyes told CBC News on Thursday that the bill introduced in the legislature on Tuesday would follow the business practice of many, but not all, payday lenders.
That includes giving borrowers the ability to pay back loans early without penalty and preventing the escalation of interest and fees by rolling loans over into another pay period.
"First and foremost is to ensure that there is strong consumer protection," said Keyes.
"Those kind of best business practices that are practised by many payday loan lenders across Canada, including members of the Canadian Payday Loan Association, aren't often followed by all payday loan lenders."
Payday loans are meant to offer consumers credit to bridge from one paycheque to the next, but payday loan companies have been criticized for high interest rates and hidden costs. In some cases, fees and interest for a two-week loan of $300 can come to $100.
In introducing the legislation, Attorney General Gerard Greenan said the new rules are based on legislation in other provinces as well as public input from Islanders last fall. The act will require lenders and brokers to be licensed by the province. They will also have to provide full disclosure of all fees before a loan is granted.
The act provides for a cooling-off period, so that borrowers who decide within two days that they don't want the loan can return the money without interest or penalty.
Regulations will prevent a consumer from taking out a second loan until the first one is paid off.