Manitoba’s PUB Gets it Wrong on Payday Loans and Contradicts Finance Minister Greg Selinger
(Winnipeg – April 4, 2008) The Canadian Payday Loan Association said today’s ruling by Manitoba’s Public Utilities Board regarding setting a cap on fees for the payday loan industry will ultimately hurt consumers and completely contradicts the instructions provided by Minister Selinger.
In giving the PUB its mandate to set rates, Manitoba’s Finance Minister Selinger stated clearly that the government should, “not drive companies out of business”, that “people are showing an interest in having this service” and that the service should be offered in a way that’s “just and reasonable”.
Instead – and completely contradicting the Minister’s instructions - the PUB issued an order that will directly drive many small and medium-sized companies out of business and stated that people should be ‘doing without’ instead of using payday loans.
Minister Selinger has said that one of the dangers of a rate cap that’s too low is that, “it drives this kind of activity into the hands of organized crime...people will seek out credit in other venues which are maybe more underground venues and what we don’t want to do is create a whole market for organized crime in our jurisdiction.”
The PUB responded by saying although, “there is a significant population in need of short-term small loans,” their ruling will result in many payday lenders “exiting the province” and resulting in consumers having to “do without”.
Minister Selinger said the Government’s objective in regulating the industry was to ensure a “viable industry”. The CPLA submitted independent evidence by Deloitte and Touche regarding the actual costs of providing the payday loan product by small and medium-sized responsible players in Manitoba. In addition, evidence was presented by a University of Manitoba Finance Professor regarding the importance of strong competition in the industry.
The Board ignored this expert and independent evidence and instead has set a rate below the demonstrated cost of providing the product – creating an unviable industry for the majority of CPLA’s responsible members – and again completely contradicting Minister Selinger’s views.
“Today’s ruling is bad for consumers and doesn’t reflect the Government’s earlier statements that they recognized the need for a viable industry to serve consumers who need access to short-term loans,” said Stan Keyes – President of the Canadian Payday Loan Association. “The PUB got it wrong – ignored independent evidence and have done nothing but ultimately put small and medium-sized, responsible businesses out of business and hurt consumers by limiting their access to credit.”
The CPLA has been actively calling on governments across the country for three years to introduce and pass effective payday loan legislation. The Government of Manitoba was the first to introduce legislation to protect consumers and asked the Manitoba Public Utilities Board to set a cap on rates. The PUB has ignored the views of Finance Minister Selinger and has set a rate cap that will ultimately hurt consumers.
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For more information, contact:
Stan Keyes – President of the Canadian Payday Loan Association
Tel: (905) 522-2752