interest – mackaycartoons

Friday December 11, 2015

December 10, 2015 by Graeme MacKay

By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Friday December 11, 2015

Payday loan industry comes under microscope

The province is moving to protect vulnerable people from cash stores and collections agencies — but a local councillor calls the efforts “half-hearted.”

If passed, new legislation by the Ontario government promises to increase protections under the Payday Loans Act, Consumer Protection Act and the Collection and Debt Settlement Services Act. The aim is to provide safeguards such as a cap on the rates charged by cheque-cashing services, a grace period for repayment for customers of rent-to-own services and reasonable costs for optional insurance on instalment loans.

It would also offer longer repayment periods for repeat payday loan borrowers, and expanded rules against unfair collection practices from businesses that purchase and collect overdue debts.

But Ward 3 Coun. Matthew Green says the legislation “doesn’t go nearly far enough in terms of really tackling the core elements and the predatory nature of this industry.”

There are 813 licensed payday lenders in Ontario — more than there are McDonalds restaurants. Roughly 35 of those are in Hamilton, according to the ministry’s online database.

For starters, Green wants to see the “ridiculous” interest rates on payday loans slashed.

Green put forward a motion this summer to limit and regulate these stores at a municipal level, which would have made Hamilton the first city in the province to do so.

Staff is now looking into the feasibility of that.

In the meantime, he and a working group made up of local agencies, including credit unions, are actively researching a model for a market alternative low-cost loan service.

Tom Cooper, director of Hamilton’s Roundtable for Poverty Reduction (HRPR), says he’d like to see provincial legislation that enables municipalities to license lenders at the local level.

He agrees there’s more work to do on this.

“At the end of the day … these services are predatory by nature and they’ll continue to take advantage of people who run into desperate financial situations,” he says.

According to a survey of 500 Ontario payday loan users earlier this year, more than half of the borrowers surveyed said they are using the service for recurring expenses, not crisis situations.

Of those surveyed, 27 per cent reported making less than $30,000 a year. (Source: Hamilton Spectator)

Friday September 11, 2015

September 10, 2015 by Graeme MacKay

By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Friday September 11, 2015

Hamilton looks to crack down on payday loan industry

Hamilton councillors unanimously approved a motion seeking from the province the ability to limit the locations of payday loan and cheque cashing outlets, while also strengthening the Payday Loans Act.

“This is predatory economic violence,” said Ward 3 councillor Matthew Green, who introduced the motion at council’s Sept. 9 meeting. “(They) are targeting our most vulnerable, indebted people. It’s legalized loan sharking.”
Green’s motion targeting the industry, which was revealed earlier this summer, includes forcing these businesses to post their rates on their walls, provide information about debt counselling, and having Hamilton staff identify all the payday loan businesses in the city.

Also contained in the motion was a request to the province to toughen the Payday Loans Act.

The act regulates the industry allowing outlets to charge $21 for every $100 people borrow. Green says desperate people use these businesses, and they end up having to go to another payday loans outlet to pay the loan of the first one.

“This is usury, this is criminal,” said Green. “I’d love to see (the places) outlawed.”

Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, says municipalities need the power to regulate a business that is taking advantage of vulnerable people.

“We deem the industry as predatory in nature because its practices and slick marketing campaigns lure vulnerable consumers into transactions where there is nowhere else to turn in a financial crisis,” said Cooper.

Based on the payday industry’s own information, for every new customer loan, 15 are repeats, said Cooper.

Stan Keyes, president of the Canadian Payday Loan Association, headquartered in Hamilton, stated in an email letter sent to councillors Sept. 8 that “council should not pass bylaws to ban industries providing services that consumers demand.”

He said the province does enforce the existing regulations, including levying fines, and revoking licenses “which they have done with non-compliant lenders.”

Keyes, a former Liberal MP, stated the industry is already heavily regulated since 2009. In 2012 there were 42 outlets in Hamilton, now there are 34. (Source: Hamilton Spectator)