A Thunder Bay city councillor is welcoming changes in payday loan regulations, saying loan providers have been allowed to operate for too long with loose guidelines that harm consumers.
Shelby Ch'ng told tbnewswatch.com she particularly likes a plan to restrict high-frequency borrowing, and to enhance compliance and enforcement powers to address unlicensed lenders or loan brokers.
They are two of the provisions of the Putting Consumers First Act introduced in the legislature.
In addition, as of January 1, 2017, the government is lowering the maximum total cost of borrowing for a payday loan from $21 to $18 per $100 borrowed.
Although Ch'ng calls the changes a good step, she believes interest rates for payday loans are still too high. She feels they should be "at least below credit card rates. Right now it's ridiculous. The 21 dollars is over 500 per cent over a year."
Other changes in the pending legislation include an extended repayment period option for consumers who are repeat payday loan borrowers, and establishing standards or factors that lenders must consider when determining a borrower's ability to repay.
Ch'ng is also interested in seeing "If there's any rules around payday lenders sending their clients to another payday lender to pay them off."
She said lenders will often "push them between each other. At the end of the day it's the client that's left without the funds to pay them back."
