Nearly 2 years later, new N.L. payday loan rules still not in force
Service NL says it's waiting on action from the federal government
It's been almost two years since the Newfoundland and Labrador government announced new rules for the payday loan industry, but those regulations still aren't in force — and the province is pointing to Ottawa as the reason for the delay.
The province passed legislation on payday loans — small loans of $1,500 or less that are borrowed for a maximum of 62 days from a non-traditional lender — in 2016.
Those regulations were expected to be enacted by the end of last year.
Service NL says those rules will set borrowing limits, increase consumers' awareness of their rights when entering into a payday loan agreement, and provide them with remedies when payday lenders don't honour their responsibilities.
The department says it's applied to the federal government for an exemption from the section of the Criminal Code that sets limits on interest rates charged to consumers.
"Until this exemption is granted, the legislation cannot be enacted," the department said.
Service NL says it will be ready once that happens.
Meanwhile, the federal Department of Justice said in a statement it is working on the province's exemption request.
But officials there can't say when the order will be made, citing cabinet secrecy.
At the time of the announcement in 2016, then-Service NL minister Eddie Joyce said people may need to turn to payday loans.
"So what we're going to ensure is that there's protection there for them, and there's a number of steps that we will bring in to ensure that there's proper protection, to the best of our ability," he said.
Al Antle, the executive director of Credit Counselling Services of Newfoundland and Labrador, told CBC News in 2016 that his group was delighted with the proposed changes.
Today, he says they still are — albeit frustrated with the delay.
"We did have a conversation with the department, the minister's office at the time. They were very enthusiastic. We were thrilled at their enthusiasm," he said.
"The minister got it, his officials got it, and the changes were scheduled to come about."
We see the impact of that every day.… It's a common occurrence for us to see payday loans with clients who use our service.- Al Antle
Antle says the new rules would level the playing field.
"They [would make] borrowing from the source less costly, less adventurous... and more easily accessible," he said.
But, since those rules haven't been enacted yet, he says consumers are borrowing money in a way that's not in their best interest.
"We see the impact of that every day.… It's a common occurrence for us to see payday loans with clients who use our service," he said.
Antle says payday loans are used by people at the lower end of the income scale and on fixed incomes.
"Not a good way to borrow," he said. "The percentage rates are outrageous."
Antle has noticed one trend in particular in the past five years.
"Many of the local payday loan [companies] sold themselves, closed their doors, consolidated with somebody else. And most of the payday loans that we're dealing with now at this agency are online," he said, noting that those businesses could be operating from anywhere.
Rules already exist in other provinces
While Newfoundland and Labrador waits for its payday loan regulations, eight other provinces have already enacted their own rules — and some have even since made changes to them.
Service NL says the proposed maximum rate that lenders could charge is $21 for every $100 borrowed.
The rates range from $15 in Ontario, New Brunswick and Alberta (where its payday loan bill is called "An Act to End Predatory Lending"), up to $25 in Prince Edward Island, where it took six years for the payday loan law to come into effect.
Some of the provinces have also included changes like allowing two business days to cancel a payday loan contract without penalty, and not allowing "rollover" loans.
The City of Toronto has taken it a step further.
In May, it placed a cap on the number of physical locations allowed across the city, and required operators to be licensed.
- A prior version of this article had said that Quik Cash on Freshwater Road had closed. In fact, that business has moved to a different location.Aug 13, 2018 9:33 AM NT