Councillors vote to limit payday loan outlets

The city is moving ahead with its plan to limit the number of local payday loan outlets to 15, with no more than one per ward.

City councillors backed the proposed bylaw, which is meant to build on council’s past efforts to protect customers of payday operations, at Tuesday’s planning committee meeting.

“I’m thrilled that the city has brought in the first payday loan zoning in Ontario,” said Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, after the meeting. “I think it will lead the way to see a lot of other municipal governments look at how they can protect their vulnerable residents.”

City council still has to ratify the new radial separation rule Feb. 28, at which time staff is also expected to report back on the possibility of excluding Flamborough and the downtown at the request of the ward councillors. As of Jan. 1, the provincial government has allowed municipalities to restrict where payday lenders can open. Hamilton already has 30 payday loan outlets currently licensed with the city. They would be grandfathered in under the new bylaw.

Coun. Matthew Green spearheaded the previous changes implemented by council, which included forcing payday loan outlets to pay an annual licensing fee. He commended the local grassroots approach to the issue, which fuelled provincial discussion around the Payday Loans Act.

“It’s the most we can do under the Municipal Act, and could we have gone further, we would have,” he said.

Doug Hoyes, an insolvency trustee at Hoyes, Michalos & Associates Inc., said one-third of his clients who file a consumer proposal or for bankruptcy owe almost $3,500 over three payday loans by the time they do so. They also have almost $30,000 in other unsecured debt, such as credit cards, he added.

“Payday loans aren’t the problem — debt is the problem,” he said.

Tony Irwin, president and CEO of the Canadian Consumer Finance Association, previously known as the Canadian Payday Loan Association, said he does not believe the city has thought through how this move will impact people, including the 500,000 Ontarians who accessed a payday loan last year.

“I think it’s unfortunate that Hamilton has decided to go down this road,” he said after the meeting. “I think the issue really should be more about encouraging alternatives,” he said, noting other lenders should be encouraged to step up to the plate.

Patrick Mohan, president of the Independent Payday Loan Association of Canada, called the changes “punitive.” He said the city can expect to see a reduction in licence renewal from his membership, which includes about 50 smaller payday lenders.

“We’re not the bad guys. Our customers love us. Our customers send us Christmas cards,” said Mohan, who is also president of Money Direct.