Posted on December 8, 2021
ACORN Canada, Momentum and Public Interest Advocacy Centre (PIAC) have brought out a policy paper which lays out key recommendations to end predatory lending and ensure fair banking. The paper has been endorsed by 30 other groups/individuals/academicians.
To read the policy paper, click here.
ACORN has championed the fair banking campaign for years. A 2020 study by ACORN Canada shows that while lenders such as Easy Financial, Cash Money etc. continue to prey on low-to-moderate income people through payday loans (short-term loans less than $1,500), there is a 300% increase in installment loans between 2016 and 2020. Installment loans include loans more than $1,500 - higher amount of debt for a longer period!
This underscores the failure of the federal government and banks in providing fair credit to low-to-moderate income people. ACORN won a commitment by the federal government in the Budget 2021 and in its election platform to lower the interest rate for installment loans. We need to ensure that this commitment translates into action.
The paper highlights four major recommendations for advancing credit justice for lower-income Canadians:
- Lower the maximum interest rate for installment loans from 60% to 36%. Ensure that the maximum rate includes all lending costs such as fees, insurance etc.
- Ensure access to safe and affordable credit for all Canadians.
- Clarify and better enable enforcement. Remove the requirement of an actuarial certificate and approval of the attorney general to prosecute predatory lenders as they pose major barriers.
- Repeal section 347.1 and include payday loans in the Criminal Code of Canada so that the federal government has the power to regulate payday loans.
ACORN is doing a National Day of Action; actions are happening in 9 cities across the county to call on the federal government to criminalize high interest rates. For more details, click here.