Small Changes to Ontario Payday Loans Act
April 12, 2017 Make Change
(This story was updated on April 13th to include reference to a change to the Payday Loan Act that allows borrowers to pay any part of an outstanding balance to a payday loan agreement at any time without any prepayment charge or penalty.)
Ontario made some rather small changes to the very bad Payday Loans Act that was put in place in 2008.
Bill 59 enacts a new Act, the Home Inspection Act, 2017, and amends three other Acts (including the payday Loans Act). These Acts are administered by the Ministry of Government and Consumer Services.
Those small changes include extending the amount of time a person must wait in between payday loans. They also expand some rules governing debt collection practices. Borrowers will now be entitled to pay any part of an outstanding balance to a payday loan agreement at any time without any prepayment charge or penalty. Previously, ony the full balance could be paid off without penalty.
Also, the province has given municipalities more power to regulate the predatory loans business. They did something similar in 2010 - giving cities more responsibility for addressing the affordable housing crisis. That is working well, wouldn’t you agree?
Clearly Something Needs to be Done
We followed the debate at the committee stage and were most impressed by comments from Gilles Bisson, Member for Timmins—James Bay (pictured to the right). We have reproduced his comments from Hansard below.
Mr. Gilles Bisson: Clearly, something needs to be done with payday loans. It is a bigger and bigger problem in all of our communities.
As we see people having a harder and harder time to make ends meet, more and more they are having to rush to try to get money any way they can, in order to be able to pay their hydro bill, their rent, groceries, whatever it might be. Payday lending institutions avail themselves to those who can least afford to borrow the money.
Clearly, what we need to have is a change to banking policy, caisses populaires or credit union policy, that allows people to make smaller loans that are maybe a little bit more risky, for a reasonable amount of interest. To do that, we would need either us at the provincial level to deal with it by way of credit unions and/or caisses populaires, because that’s the people we regulate, or the federal government would have to do something through the Bank Act.
Clearly, something needs to be done. This is a step in the right direction. I don’t think it goes as far as I would like. I don’t think it deals with the problem in a full way. It will be interesting, when this bill gets to committee, if the government is going to actually allow amendments to come forward in order to strengthen the bill, to give the protection that we need to consumers when it comes to payday loans.
Loans are a reality. I think that we need to have a regime that allows people not to get gouged when it comes to the interest rates, and to be able to get themselves in a position where they can make ends meet and they can afford to pay back their loans in a timely way, with not too much interest.
Perhaps surprisingly, Mr. Bisson joined 85 of his colleagues in unanimous support of Bill 59.
More to Read
We’ve written on this issue many times. Our most recent piece suggests something that can be done. https://www.hamiltonjustice.ca/blog?post=No+Real+Change+to+Payday+Loan+Lending+Rates+in+the+New+Year+&id=384
To look at Bill 59 go to the link below. Scroll down to the last few pages for the payday loan section of the legislation.http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=4333