Posted June 14, 2016
The first time Desiree Wells took out a payday loan, in 2001, she needed quick cash to cover an unexpected vet bill for her cat.
“That loan is still haunting me,” Wells, 36, said Monday. “It’s just basically a trap. It’s literally a nightmare and it’s a vicious cycle.”
On Tuesday at noon, Wells will attend a rally outside a Money Mart location at Commercial Drive and East 10th Avenue, along with members of B.C. ACORN, a group representing low- and moderate-income families across Canada. A statement from ACORN said the rally aims to pressure the B.C. government to “clamp down on predatory lending in B.C.”
Wells, who has an artificial leg that limits her ability to work, is on disability assistance and earns “a bit of extra money” designing and selling jewelry. She has friends who have used payday loans, she said, and none have had positive experiences.
ACORN wants the B.C. government to change the legislation regulating the payday loan industry, including reducing the maximum rates charged, currently up to $23 per $100 borrowed.
Those rates can work out to the equivalent of paying 500 per cent or more annually, according to a January report from Vancity. British Columbians, the report noted, are using payday loans at an increasingly higher per-capita rate than the rest of the country.
B.C. NDP finance critic Carole James raised the topic last month in the legislature, calling the findings of the Vancity report “shocking,” and adding: “The annualized percentage rates are outrageous and cause families to get further and further and further into debt.”
James pressed the Liberal government on why they had not followed through on “an election platform promise … in 2013 to reduce the maximum interest payable on payday loans.”
In an emailed statement Monday, a spokeswoman for the solicitor-general’s ministry said staff are working on a proposal for a review of B.C.’s payday lending regulations, which is expected to be provided to the minister by the end of the year.
The industry has come under fire recently, including in the U.S., where this month the Consumer Financial Protection Bureau released a proposal to regulate payday loans.
Last month, the Alberta government introduced “An Act to End Predatory Lending,” a bill proposing to “bring substantive changes to the payday lending industry, including the country’s lowest borrowing rates,” the government said.
But Alberta’s changes could have unintended consequences, said Tony Irwin, president of the Canadian Payday Loan Association.
“In Alberta, what they’ve done will be devastating for the industry, but more importantly than that, it will result in a denial of access to certain borrowers who need payday loans,” Irwin said Monday.
“These changes are going to force consumers to the illegal, unlicensed industry,” said Irwin, adding many illegal loan companies operate online and are based “offshore, outside of any Canadian jurisdictions.”
“When the regulations are too restrictive, forcing some of the licensed lenders to close their doors, the need for credit doesn’t go away. So those borrowers are going to go somewhere to find it,” Irwin said.
Article by Dan Fumano for the Province