Hamilton stepping up the loan shark battle

A proposed separation bylaw will limit the number of payday outlets

Fitness wristbands and step trackers are all the rage these days. These devices count your daily steps and report back to you on your progress.

I have one and do my best to try to reach 10,000 steps a day – what the experts think is a healthy daily dose of walking. I’ve become pretty good at guessing the step distance between my home and the local grocery store: 2,150 steps, or home and the local library branch at 1,700 steps.

Last week, I took my trusty fitness wristband and went for a walk downtown.

I started at the corner of King and Catharine, the location of a payday loan outlet called Money Direct. I walked west along King Street and came to a second payday loan outlet called Cash Money: It was 186 steps away.

From there, I walked another 115 steps to a Money Mart.

I turned north at King and James, going another 357 steps and found a fourth payday loan outlet, Ca$h 4 You. Kitty-corner to that payday lender was yet another Money Mart franchise — only 105 steps away.

You get the picture — within 800 steps, I could walk to five different payday loan outlets in our downtown. And that’s only a small smattering of the outlets in our community.

There’s little doubt that this ugly glut of payday loan outlets has become blight in our community.

Hamilton’s Social Planning and Research Council estimated 16,000 Hamiltonians borrow as much as $50 million annually in payday loans.

This type of borrowing may appeal to people who run into a financial emergency and have poor credit. But a payday loan can very quickly spiral into a cycle of despair.

More often than not, people are utilizing payday loans to help cover basic necessities like food and rent simply because they have fallen so deeply in debt. It’s not unheard of for borrowers to owe tens of thousands of dollars to payday lenders.

Insolvency trustee Doug Hoyes, of Hoyes-Michaelos, released a report last week showing a growing number of people who file for bankruptcy owe money to payday lenders. According to the report, “Insolvent borrowers are now 2.6 times more likely to have at least one payday loan outstanding when they file a bankruptcy or consumer proposal than in 2011.”

While the provincial government has taken some small steps to rein in the predatory nature of payday loans, much, much more needs to be done.

Into that leadership void, Hamilton City Council has stepped up.

Two years ago, a motion by Coun. Matthew Green led to Ontario’s first payday loan bylaw. Today, local outlets in Hamilton must pay a licensing fee and post the actual interest rates of their loans versus the interest rates offered by chartered banks.

On Tuesday, council once again has an opportunity to take the fight back to the predatory payday loan industry and protect consumers with a new tool: A radial separation bylaw.

Hamilton’s licensing department is proposing Ontario’s first zoning regulations to limit the number of payday loan outlets that are allowed in the municipality. Cities use these types of rules for other “bad-forneighbourhood” businesses.

The city wants to increase the distance between these payday loan outlets.

It would in effect reduce the number of payday loan outlets allowed in Hamilton from almost 40 to 15 outlets (one per ward) over time.

While zoning payday loan outlets won’t eliminate the problem, it could significantly cut the industry’s ability to victimize vulnerable borrowers.

In the end though, payday lending is a symptom of a larger problem.

Bill Thompson, a devoted local advocate, passed away last year, but wrote in The Spectator in 2015, “Too many of the working poor and vulnerable are unable to access the financial services that the rest of us take for granted.”

Our big banks raked-in $42 billion in profits last year (higher than ever before) and yet more and more people can’t access small loans or have their cheques cashed without extended waiting periods.

Here’s where the federal government can show some leadership: Mandate the big banks to open up financial services — including small emergency loans — to those borrowers who have been shut out.

Let’s restore fairness and dignity to our financial system.