Payday loan industry regulations coming for New Brunswick
No timeline for legislation to protect working poor from payday loan debt cycle, says Stephen Horsman
Justice Minister Stephen Horsman says proposed regulations for the payday loan industry are being reviewed and will be proclaimed, but he won't say when.
"The act to regulate payday loans was given royal assent seven years ago but never proclaimed, despite the urgent need for action to protect the working poor from punishing rates and fees, frankly, charged for payday loans in this province because of the lack of regulation," Coon said in the legislature.
"The working poor get trapped in this situation. In doing so, they can't afford to pay for their rent, they can't afford to pay for their groceries, despite the fact they are working," he said.
Coon called on the government to adopt the repeat borrowing repayment provisions of British Columbia, as recommended by the Saint John Human Development Council in a report released on Wednesday.
The report was prepared in response to a request by the New Brunswick Financial and Consumer Services Commission for comments on Bill 55 — An Act to Amend an Act Respecting Payday Loans, which was passed last spring, but never proclaimed.
Limit cost of borrowing
Randy Hatfield, the executive director of the Saint John Human Development Council, says the proposed regulations lack rules on repeat borrowing.
"What happens, of course, is that your next paycheque comes along and it's $500 and you still have obligations for rent, for utilities, for food, fo the cost of living, and then you get caught into a cycle of repeat borrowing and concurrent borrowing," he said.
The council contends the cost of borrowing should be limited to $17 per $100 on a two-week loan.
It also recommends the payback period be extended for those who have borrowed three times or more within a two-month period, said Hatfield.
In addition, a portion of licensing fees should be spent on community-based financial literacy initiatives, he said.