Who says city hall doesn’t work fast?
Last month, the Calgary city hall task force requested that the municpitality clamp down on the payday loan industry. Despite the provincial government implementing its own set of rules and regulations for the industry, city councillors thought it would be a prudent move to adopt their own series of guidelines that can protect consumers from “predatory” payday lenders.
A couple of weeks later, the payday loan proposal was approved Wednesday by the committee responsible for community and protective services. The payday lending and financial inclusion task force report suggested officials institute mandates for operators to display signs on debt counselling and money management and verbally inform customers about these services.
If payday loan stores were in violation of these rules then they’d pay a fine of $1,000.
Moreover, the city’s task force report recommended that the New Democratic Party-led province incorporate a financial literacy fund and establish a standard lending contract for clients.
The proposed rules will now go to city council for a vote. It’s unclear right now what its chances are of being approved or rejected.
This comes one year after the city prohibited payday loan businesses from opening in clusters.
Since last week, the payday loan industry said that municipal reforms would simply duplicate current measures as payday loan stores combat “devastating” restrictions from the Albertan government. However, one official says such rules would simply complement provincial regulations, and would not force businesses in this industry from leaving Calgary.
“These new regulations appear to be one more step in the direction to run legitimate payday loan businesses out of business. We don’t understand. Banks won’t lend money to the customers so we do and if it’s not us, who’s going to fill our shoes?” Landmarkcash.com public relations manager Carl Fitz.
“There are other jurisdictions in Canada and the U.S. with similarly restrictive rules or more restrictive rules and, contrary to payday lenders and critics, the reforms have not caused the industry to shut down and leave,” said Courtney Hare, a public policy manager with Momentum, a community economic development organization, in a statement.
The province put forward the Act to End Predatory Lending, also known as Bill 15. It would reduce payday loan fees from $23 to $15 for every $100 borrowed. The bill would also allow borrowers to repay their loans in installments rather than in lump sums.
Payday loan stores provide customers with high-interest, short-term loans. Proponents of the industry say it helps consumers to cover their rent or utility bill when they’re short on cash until their next paycheck. Critics, meanwhile, note that payday loans send consumers into debt that is hard to pay off. and that the banking industry needs to intervene to fill that void.
Across North America and Europe, governments have passed legislation reining in the payday loan industry. Some states in the U.S. have gone as far as banning payday loans altogether.
Categorized as: Business