Payday Loan Displeasure Heats Up in Victoria
By J.J. CameronPayday Loan Writer
Being charged upwards of 60 percent interest for an advance on one's paycheck is a notion Rob Fleming finds offensive.
Neverthless, the majority of cash advance establishments doing business in Greater Victoria are charging just that and then some. While the ceiling under the Criminal Code of Canada is 60 per cent interest, the added fees and finance charges tacked on to long-term payday loans make the cost of borrowing through such companies exorbitant. In essence, Fleming said, they are operating outside of the law.
"It's a situation where prosecutions are extremely unlikely, but what we've had is a free for all where people are getting gouged," the Victoria-Hillside MLA said.
In the Capital Region alone there are more than a dozen companies not attached to banks or credit unions offering such services as payday loans, injury advances, telephone reconnect loans - essentially cash in pocket for the consumer.
Last week Fleming introduced a private member's bill in the legislature that he said would lay the groundwork for the province to regulate interest rates among other conditions related to the fast payday loan industry.
Victoria-based national Money Mart, with 350 branches the largest payday loan provider in the country, comes in just under the line at an annual rate of 59 per cent interest for cash advances. However, people who acquire a fast cash advance and do not repay it before payday are charged interest and first-party cheque-cashing fees of $7.99 per item and 9.99 per cent of the face amount of the advance.
The Little Loan Shoppe, an international company with branches in North America and the U.K. and a toll free number in the Victoria Yellow Pages, states on its website "there is no interest rate connected with your loan." However, it shows an "annual percentage rate" of 3,041.67 per cent for a three-day loan of $500, or $125. That "finance charge" of $125 is the same for an 18-day loan, which equates to 506.94 per cent.
Money Mart president Syd Franchuk would not comment to the Saanich News, instead referring the call to Canadian Payday Loan Association president Michael Thompson.
"In principle we support the concept of regulation of the industry," said Thompson, whose group represents 30 companies operating 850 of the roughly 1,350 cash advance loan outlets in the country. "We think that the government of B.C. should be bringing in legislation now so that when the federal government gives the province the authority to set rates, it will be in position to move quickly."
Solicitor-General John Les said Tuesday it would be pointless for B.C. to move on legislation until the federal government delegates responsibility for regulating the industry to the provinces, an action requiring a change to the Criminal Code.
"Other provinces can pass legislation until they're blue in the face," said Les, who has been part of a joint provincial-federal committee looking at the payday advance issue the past three years."Without the changes to the federal legislation they're just going to be spinning their wheels.
A private member's payday loan bill introduced in Ottawa by Senator Madeleine Plamondon in 2005 is similar to Fleming's and passed first reading in parliament just before the last election. Les said he continues to lobby the feds to take action on the matter.
