Sudbury city councillor wants more regulation of 'predatory' payday lenders
SUDBURY -- Payday lenders have been a staple on Sudbury streets for sometime now, but things could change if Geoff McCausland's motion passes at council next week.
The Sudbury city councillor wants city staff to look into regulations surrounding the industry and report back to council. Staff's findings could lead to additional regulations for future payday loan outlets, including space between establishments and making sure they're not located near social services.
"A few months ago there was a billboard as you went into the Donovan -- and that's one of the areas that I represent -- and the billboard was for payday loans," McCausland said. "Payday loans in many ways serve a purpose for some people, but they are also a form of predatory lending for others -- and often the most vulnerable people in our community.
"And so when I saw that going into an area that's traditionally less affluent than other places in the city, I thought that was a little bit ... I thought that was very unfortunate."
McCausland said changes in provincial legislation are giving cities the opportunity to regulate how payday loan outlets operate through business licensing requirements.
"What I'm hoping to do is put some stipulations on what's possible, whether it's you can't have two within a one- or two-kilometre radius, or you can't have them near a casino or however different many things," he said.
Deeper in debt
The Ward 4 councillor said there is nothing stopping people from getting loans from several establishments and paying off one with another, creating a deeper debt hole for people to get out.
He said they can't go back and change what's been done, but by imposing restrictions on business licensing, they can hopefully prevent some of those at risk from being victimized.
McCaulsand said he's hoping staff will take a look at what other cities and provinces have done already when it comes to regulating the industry.
A spokesperson for the Social Planning Network of Ontario applauded McCaulsand's efforts, telling CTV that the City of Hamilton has already had some real success on this front.
"I think he has a great point with the targeting, because what's often been found is neighbourhoods that are often targeted have vulnerable populations," said Stephanie Ellens-Clark.
'It's not OK'
"I'm pretty excited there is a councillor tackling this piece because this the municipality taking a stand and saying, you know, it's not OK."
Yvonne Kelly, also with the social planning network, said people who are poor or the working poor have been known to gravitate to payday lender, and are often paying interest rates of 391 per cent.
"We know that this isn't anyone's first choice in having to pay that kind of interest rate," Kelly said. "Some have suggested the provincial governments ask the payday lenders to reduce their interest rates, as they've asked other credit card companies and institutions to do. That's not happened," said Kelly.
Ontario's Progressive Conservative Government recently lowered interest rates for those in default of their payday loan to 2.5 per cent, but the regular borrowing rate still remains at the higher level.
Sudbury MPP Jamie West said the move doesn't go far enough and Ontarians deserve better consumer protection. West said the NDP is calling for a borrower's bill of rights to protect people from predatory lending.
"The Ford government has done the bare minimum with predatory payday loan companies," said West. "Frankly, this ‘straw-man’ announcement still leaves people subject to predatory loans and their exorbitant interest rates. It does nothing to protect people from the payday lenders who are targeting people affected by COVID-19."
Comply with laws
CTV News reached out to several payday lenders, including Cash Money, and did not hear back before deadline.
The Canadian Consumer Finance Association, which represents payday lenders, issued the following statement:
"Payday lenders are licensed and regulated under provincial payday loan legislation and inspected by the Ministry of Government and Consumer Services to ensure they comply with all applicable laws and regulations. The industry is shirking because of increased government regulation at the provincial and municipal levels that has forced many business to close."
The association quotes a survey released by the Financial Consumer Agency of Canada that shows more than half of borrowers living in households have annual incomes over $55,000.
"For a single mother who has an expected shortfall of income and needs a loan to buy groceries, or a senior who needs to borrow to pay for medication before receiving their pension cheque, a payday loan maybe their best option," they said.
The motion still needs the approval of council and will be voted on the Sept. 22 meeting.