Posted April 23, 2019
Cash-lending stores in Ottawa South were put under the spotlight as protestors waved signs and chanted for a halt to what they say is predatory lending.
“What do we want?” Gisèle Bouvier called through a bullhorn.
“Fair banking,” came the reply from more than two-dozen members of ACORN, a national association of low- and moderate-income people who advocate for social and economic justice, outside a Bank Street cash shop in Alta Vista on March 26.
“When do we want it?” Bouvier asked. “Now,” the group replied, before boarding a bus and heading to their final stop of the day: Ottawa South MP David McGuinty’s constituency office.
The group and members of city council, including Mayor Jim Watson, agree that high-interest-rate cash shops and rent-to-own furniture stores are proliferating in lowincome neighbourhoods where ACORN says people in need of cash are spending money to have their cheques cashed and taking out high-interest loans to make ends meet.
Bouvier, a national ACORN board director, said often those relying on cash shops don’t have a choice. “The reason people are turning to these predatory lenders is because banks don’t offer services that are tailored to their needs,” she said.
The group is calling on the federal government for fairer banking practices.
Their wish list includes: lowinterest credit for emergencies, low-interest overdraft fees, not holding cheques, lowering nonsufficient fund fees, supporting postal banking and credit union credit products for lowand moderate-income families, creating a national anti-predatory lending strategy, creating a national tracking database to track registered loans and lowering the maximum interest rate from 60 to 30 per cent in Canada’s Criminal Code.
Many impoverished residents are struggling to even open a bank account, said Bouvier.
“What we have to do is make people aware that is a dangerous thing to get into,” she said.
People become stuck in a vicious debt cycle, taking out multiple loans to try and pay off a previous high-interest loan or rolling over that loan. There are restrictions on the number of loans people can take out at one time, said Bouvier, but there is no oversight to track that, which is why a database is needed.
“That’s why we want to see an alternative to payday lenders, we want to see banks and credit unions to provide services that are tailored to low-income people,” Bouvier said. “Otherwise, it’s like squeezing the lemon dry. Being poor is expensive.”
City staff are expected to produce a report for the planning committee later this year that explains what abilities the municipality has to regulate the location of payday loan businesses through zoning.
McGuinty echoed the group’s concerns.
“Our government is very concerned about payday lenders, and particularly payday lenders that sometimes prey on vulnerable citizens in Ottawa South and beyond,” he said in a telephone interview.
He characterized ACORN’s wish list as “long” and “ambitious” but said he has shared it with the minister of finance.
McGuinty said the federal government has enacted a number of changes designed to better protect financial consumers, but that often people are impeded from opening a bank account because they don’t have the required identification.
A “comprehensive review” of banking sales practices was done and the federal government worked with the provinces and territories on improvements, said McGuinty.
As well, the Financial Consumer Agency of Canada has been given tools to supervise banks and bolster consumer protections, he added.
Banking service fees have generally gone down over the years, he said citing the Canadian Bankers’ Association.
“Many Canadians say they don’t pay service fees,” he said. “Thirty-one per cent of Canadians who have a bank account report paying no fees at all because of these no fee services packages that have been offered for seniors, students, youth, newcomers or folks with registered disability savings plans.
“That catches a lot of people,” he said, adding that another 45 per cent say they pay between $1 and $15 a month in service fees.
According to Ontario’s Ministry of Government and Consumer Services, which licences these types of businesses, there are 52 payday loan locations in Ottawa representing 18 licensed payday lenders, as of March 21. There were 55 locations representing 18 licensed lenders at this time last year.
The province has received three complaints in two years about cash stores here.
Article by Erin McCracken for Ottawa Voice (page 8)