Payday loan rules blamed for store closures
The doors have closed at several payday loan outlets in Winnipeg just as tough new legislation in Manitoba takes effect.
The three city locations for Cheque Stop have shut down, along with the Moneymax location on Goulet Street. The Portage Avenue Moneymax store remains open.
Stan Keyes of the Canadian Payday Loan Association said the Manitoba government was advised its tough stance would come at a cost.
"The CPLA had warned Manitoba that if they had set the rate too low and put the restrictions too high, stores would be forced to close their doors, so it's not a surprise," Keyes said.
A phone call to Moneymax's Goulet location was forwarded to the Portage Avenue store. An employee who answered the phone said the Goulet store closed specifically because of the new legislation.
Lowest rates in country
The new rules, which came into effect Oct. 18, put a cap on the fees that can be charged.
The new maximum rate that can be charged for a payday loan is $17 per $100. The maximum amount of a loan can only be 30 per cent of a person’s next net pay.
Manitoba’s rate is the lowest in the country among provinces that allow payday loans.
The changes were announced in July.
"These changes will offer consumers protection from high interest rates, unfair business practices and a cycle of debt that many people have trouble getting out of," Family Services and Consumer Affairs Minister Gord Mackintosh said at the time.
The new rules also require lenders to be licensed and bonded. Cheque Stop, according to a government spokesperson, did not have a licence.
The stores that have closed are in the minority, said the spokesperson.
There are still 83 payday loan locations in Manitoba, representing 21 companies, said the spokesperson.
All of those are licensed.