Posted on September 15, 2021
ACORN Votes 2021: Fair banking/ End predatory lending
Millions of people lack access to fair banking, they are unbanked or underbanked. The failure of banks to serve low-and-moderate income people is leading to massive growth of predatory lenders that charge 60% - 500% interest, depending on the size of the loan. Recent ACORN study shows that while people continue to use payday loans, lenders are now increasingly offering installment loans. The study showed an increase of 400% in the number of people taking out installment loans between 2016 and 2020, which means much higher amount of loan and much longer period of debt.
ACORN's platform to ensure fair banking for all/ end predatory lending
- Lower the criminal interest rate from 60% to 30% for installment loans. Ensure that the maximum rate includes all associated lending costs: Fines, fees, penalties, insurance, or any related cost. Including NSF fees.
- Lower the NSF fees from $45 to $10.
- The federal government must mandate banks to provide an affordable loan for low-and-moderate income people back-stopped by the Government of Canada, so they can avoid predatory lenders in a time of personal financial crisis.
- The federal government must support other alternatives like postal banking.
Where do the Parties Stand?
- Close loopholes that allow predatory lenders to charge ultra-high interest rates.
- Table legislation again to end predatory lending by putting limits on the interest rates that private companies can charge on loans. This includes calling on the government to establish a cooperative or non-profit lending circle to protect low-income and other vulnerable Canadians.
- Work with Canada Post to improve access to fair and affordable banking by developing a model of postal banking to help nearly two million Canadians in underserved regions.
- Raise corporate income taxes on the largest, most profitable banks and insurance companies who earn more than $1 billion per year and introduce a temporary Canada Recovery Dividend.
- Require financial institutions to offer flexible repayment options by default in times of crisis. This will include a mandatory option for a 6-month deferral of mortgage payments in qualifying circumstances.
- Crack down on predatory lenders by lowering the criminal rate of interest.
- Enhance the powers of the Financial Consumer Agency of Canada to review the prices charged by banks and impose changes if they are excessive.
Get the banking services people need at a price they can afford by:
- Ordering the Competition Bureau to investigate bank fees.
- Requiring more transparency for investment management fees so that seniors and savers don’t get ripped off. This will include requiring the banks to show investment returns net of fees.