Payday Lending Group Happy with N.S. Regulation
- BYLINE: Gillian Cormier
- SOURCE: allnovascotia.com
- DATE: March 30, 2010
A payday lender industry group won't be asking the Nova Scotia Utility and Review Board for any changes to payday loan regulations in Nova Scotia. Stan Keyes, president of the Canadian Payday Lender Association, which represents 20 payday lender associations across Canada but is more than 75% comprised of Money Mart stores, says the organization is pleased with how regulation has worked in Nova Scotia over the past two years.
Keyes says N.S. consumers are protected, the business is viable, and competition is keeping the average rates in Nova Scotia around at $20 per hundred. "This demonstrates the lenders are not interested in gouging the consumers," he said.
"They want to offer a fair product with a fair return." He says he will be attending the hearings, and his only recommendation for the board is, "If it ain't broke, don't fix it".
It's been almost two years since the board put into place new rules for payday loans. A few years ago, the federal government exempted payday lenders from section 347 of the Criminal Code which established a criminal rate of interest at 60% APR. The federal government passed the buck to the province for making the rules for short-term, low-sum lending.
At a hearing tentatively scheduled for November, the board will examine how the payday loan market functioned and whether it needs adjustments.
In July 2008, the board released its first decision on payday lenders, following a federal decision amending the interpretation of criminal rate of interest to allow short-term loans from payday lenders. Since that time, the industry has grown in the province.
There are currently 13 payday lenders with 42 locations in the province - up from 11 lenders and just over 30 locations in January 2008 (see allnovascotia 2008-08-01).
The board now decides how much money borrowers can lend, renewals and penalties. A maximum of $31 charge per $100 borrowed is permitted in Nova Scotia. The cap was put in place to protect the less sophisticated consumers who do not shop around for the lowest rate or perhaps have a poor understanding of the nature of the product. Each store also has to pay a $3,000 per location yearly registration fee.
In B.C., Alberta and Saskatchewan, the cap is $23 per hundred. In Ontario, it's $21. Manitoba, the first province in the country to regulate payday loans, capped fees at $17 per hundred - a move that the CPLA said would all but kill the industry in the province. New Brunswick and P.E.I. will likely issue their decisions soon.
The board will also take into consideration the decisions of other provinces in reviewing Nova Scotia's regulations.