Province looks for input on governing payday loan firms
The Guardian
The Office of the Attorney General has just released a consultation paper inviting the public to comment on the regulation of payday lenders in the province.
These lenders, who have moved into the province over the last few years and are operating store fronts in a number of Island communities, are not currently regulated by the province.
A payday loan is a short-term loan for a relatively small amount to be repaid on the borrower’s next payday. The borrower writes a post-dated cheque for the principal, plus interest and fees.
A typical payday loan might involve a loan for $200 cash with a $275 repayment due two weeks later.
The Criminal Code currently sets a limit of 60 percent on the annual interest rate for lenders. With short-term loans, such as payday loans, the total cost of borrowing, including fees and charges, far exceeds that limit.
For example, in the loan described above, the effective annual interest rate is close to 1,000 per cent. A recent amendment to the Criminal Code exempts payday lenders from the 60 per cent limit, if there is provincial regulation in place and the province has set the maximum cost of borrowing.
“Most provinces are moving toward regulating payday lenders,” says Attorney General Gerard Greenan. “The P.E.I. government is currently considering a similar initiative, and we want to know what Islanders think. This is an opportunity for the public to tell us how the province should respond to payday lenders and what rules they would like to have applied to the industry.”
In addition to dealing with the cost of borrowing, many provincial laws are also setting best practices for payday lenders. For example, the legislation in other provinces requires full and clear disclosure of all terms of the loan in the loan agreement. Generally, lenders are also prohibited from extending further credit until the borrower has fully paid off all previous loans.
To participate in the consultation, members of the public and interested parties are asked to submit written comments by Dec. 31, 2008.
The consultation paper is available on the P.E.I. government website at www.gov.pe.ca/attorneygeneral (click on Consumer Services).
Copies can also be requested from the Consumer, Corporate and Insurance Services Division of the Office of the Attorney General at the Shaw Building (4th Floor), 95 Rochford St, PO Box 2000, Charlottetown, PE, C1A 7N8 or by telephone at 368-4580 or 1-800-658-1799.
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Quiet Guy from Chtown, PEI writes: Close the criminals down. we could do it for boot leggers. We can do it for these crooks.
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Tell the Truth from Charlottetown, PEI writes: It's up to the provincial government to tell us about the huge, greasy lobby that is trying to keep loan sharks operating on the Island.
And since they're already here, they'll do anything to stay here and keep charging interest rates that are by any definition, usurious.
Given the government's track record on such things as VLTs, they will likely find some regulatory half measure (that doesn't work, of course) to keep bandits in business.
Since Island opinion about these operations seems almost unanimously against, how about a plebiscite (or even a large sample public opinion poll)?
If the plebiscite/poll answer is, say, 75% no, then close them down with an obligation on the government to supply a source of low cost, short-term loans through a government agency, such as social services.
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incredulous from pei writes: These loan operations are nothing short of leeches that prey upon those least able to afford to get a loan, then charge them huge sums of interest. I say it is stealing from the poor to give to the rich. Reverse Robin Hood, huh? Close them down. There is a reason most folks visit the robbers. They can't get credit elsewhere and can't live on what they are making. Maybe there is an addiction involved. If that is the case, then the payday loan folks are enabling the addiction and preventing the poor souls from seeking the help they will eventually have to get. I don't think we want them here. When folks need a hand up on PEI, well, we all chip in. If they are borrowing for activities detrimental to their well-being, lets get them into a treatment program. Here's a thought....maybe the payday loan folks will fund treatment centers....ya, right.
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Who are we to decide for others? from PEI writes: Where do people go for short-term loans when the banks refuse them? Who are the well to do to deny others less fortunate the opportunity to obtain credit.
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who are we from PEI writes: We are the people who are trying to stand up for the people who can't stand up for themselves and that's what the government should be doing as well.
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eb from pei writes: i know one guy is being hassled by these payday loan people he owes them alot of money he will get caught sooner or later..
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