Calgary city council has acted quickly in its quest to rein in the payday loan industry.
Last month, the city’s committee on community and protective services released a payday loan report. The task force made several recommendations, including mandating stores to display signs related to money management and debt counseling and to verbally inform their customers about these services. These would complement the province’s industry reform endeavors.
If stores had failed to partake in this mandate then they’d face a fine of $1,000.
This comes one year after Calgary had imposed a ban on lenders from opening in clusters.
A month later, the city council voted in favor of slapping new rules on operators that offer instant loans in the city. Councilors supported requiring payday lenders to orally inform borrowers about money management support and debt counselling services as well as displaying several signs on Monday.
“It’s predatory lending against a particularly vulnerable part of our population, so we need to do what we can about putting rules around how they operate in our city,” said Councillor Brian Pincott, adding that Calgary had an obligation to protect its citizens.
Councillor Sean Chu was the only member of the council to oppose the amended bylaw. He pegged the question: how much is enough? Chu stated that the city keeps passing laws to supposedly protect consumers and citizens.
“When will this end? We keep trying to protect people, to protect everybody,” he to council. “There’s no end to protecting people. Does that mean in the future everybody will be issued a helmet for walking, for biking? To me it’s not very realistic … We have to teach people to take responsibility for themselves. We cannot try to protect everybody and everything.”
Pincott replied to Chu’s remarks that the government’s role is to shield citizens.
“It is our job. It is our job to actually look at what we can do to help and protect citizens, particularly those who are the most vulnerable in our society,” he responded.
The Alberta New Democratic Party (NDP) recently passed legislation that would tackle predatory lending across the province. As part of the new law, payday loan stores will be legally required to charge a maximum of $15 for every $100 borrowed, down from $23, and offer borrowers a minimum of 42 days to pay back the money before the interest takes into effect.
Some weren’t pleased when the legislation was passed last month. Anti-poverty activists and consumer advocacy groups wanted the provincial government to mandate payday loan outfits to provide installment plans, which would go a long way for those in financial destitute.
In recent weeks, the payday loan industry in Alberta has come out against both the province and the municipalities. They argue that governments in various jurisdictions and levels are duplicating and sometimes triplicating laws, which could force some payday lenders to close their doors eventually.
Critics want payday loans gone because they say it hurts the poor more than it helps. Proponents present the case that short-term, high-interest loans are a necessity because many consumers still don’t have access to traditional forms of credit and need funds to cover their rent or lighting bill.