Canadian Payday Loan Association Believes Half of Ontario Lenders Will Have to Tighten Belts Under Proposed Rate Cap

(Hamilton) – The Canadian Payday Loan Association (CPLA) today said that about half of the Ontario payday loan industry will have to tighten its belts in order to operate under a proposed $21/$100 upper maximum to be applied to payday loans.

The Ontario Government’s independent “Maximum Total Cost of Borrowing Advisory Board” today recommended the maximum fee for a payday loan should be $21 per $100 lent.

“The government has a balanced proposal before it that takes into account consumer protection and the viability of the industry to continue to provide this needed financial product,” said the Hon. Stan Keyes, President of the CPLA. “But there are some responsible payday lenders – especially in smaller towns across Ontario – that are going to have to significantly tighten their belts in order to still operate under this proposed maximum fee.”

In addition to today’s proposed maximum fee, the advisory board acknowledged:

  • Many borrowers are using payday loans effectively and responsibly
  • A demand for payday loans exists and the industry must continue to viably operate
  • Profit margins in the industry are not excessive
  • The industry does not prey upon the poor as some advocates suggest

The CPLA has been actively working for 5 years with governments to pass legislation and implement maximum fees to ensure a balance between a viable industry and consumer protection.

Many of the elements of Ontario’s new regulations are already part of the CPLA’s “Code of Best Business Practices” – introduced four years ago and monitored by an independent Ethics and Integrity Commissioner to ensure adherence among CPLA members.

In addition, the CPLA was a partner with the Ontario government to establish stronger disclosure measures in stores and the CPLA already promotes consumer education and awareness by posting credit counseling brochures in every member store.

Upwards of 2 million Canadians have used payday loans to cover small-sum, short-term emergencies. Loans are capped at $1,500, with the average loan being $280 for 10 days.

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For more information, contact:
Hon. Stan Keyes – President of the CPLA
(905) 522-2752
Email: stan.keyes@cpla-acps.ca