Gov­ern­ment moves to reg­u­late pay­day loans

The Southern Gazette - - EDITORIAL - BY JAMES MCLEOD

The gov­ern­ment is mov­ing to reg­u­late pay­day lenders af­ter years of op­er­at­ing out­side the law.

Ser­vice NL Min­is­ter Ed­die Joyce said that the leg­isla­tive amend­ments de­bated in the House of Assem­bly amount to con­sumer pro­tec­tion, but that doesn’t mean the gov­ern­ment is en­cour­ag­ing peo­ple from us­ing pay­day lenders.

“If there’s one point I want to make very, very clearly: We’re not pro­mot­ing pay­day lenders,” he said.

“We know they’re here. We know that they’re go­ing to op­er­ate. So we want to put con­sumer pro­tec­tion in that. We’re not pro­mot­ing it.” The crim­i­nal code pro­hibits loan­shark­ing by mak­ing it il­le­gal to charge rates higher than 60 per cent. But nearly all short-term pay­day loans are much, much higher than that if you work it out on an an­nu­al­ized ba­sis.

Lenders haven’t been pros­e­cuted, though, be­cause au­thor­i­ties have de­cided it’s not in the pub­lic in­ter­est to do so, which has left the pay­day loans busi­ness in a le­gal grey area.

Un­der the pro­posed regime, the gov­ern­ment will pre­vent peo­ple from be­ing charged more than $21 per $100 bor­rowed — in­ter­est, fees, all-in — and the loans must be no more than $1,500 and for a max­i­mum of 62 days.

Bor­row­ers will have a two-day cool­ing off pe­riod where they can can­cel the loan, and lenders will have to offer very spe­cific warn­ings about the money be­ing a high cost loan.

This will all take some time to come into force, be­cause the pro­vin­cial gov­ern­ment will have to get ap­proval from Ot­tawa to in­sti­tute this regime, be­cause it es­sen­tially in­volves waiv­ing that section of the Crim­i­nal Code.

Joyce said he’d like to see th­ese new con­sumer pro­tec­tions in place some time in 2017.

JAMES MCLEOD/TC ME­DIA

Ser­vice NL Min­is­ter Ed­die Joyce said the gov­ern­ment wants to add con­sumer pro­tec­tions to pay­day loans, but that doesn’t mean they’re en­cour­ag­ing peo­ple to use them.

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