Regulator trims fees for payday loans in Nova Scotia

The province's Utility and Review Board is cutting the fees Nova Scotians are charged for payday loans. 

The regulator also wants clearer information from payday lenders about how many borrowers are unable to pay up. 

Nova Scotians currently pay the second highest payday loan fees in the country: $19 for every $100 borrowed for a payday period of two weeks. 

Those fees will be dialed back to $17 on Sept. 1 and to $15 on Jan. 1, 2024. 

"I'm happy with it," said David Roberts, a Halifax lawyer who acts as a consumer advocate. He argued for the changes at a public board hearing in March, part of a regular assessment of the industry every three years.

"They're lining us up where we should be, which is with the rest of the country," he said. 

Lenders object to fee decrease

A spokesperson for small payday lenders told the UARB that lower fees would be untenable for lenders. 

But Roberts says the industry still thrives in other parts of Canada, in some cases branching out into other kinds of commercial lending such as instalment loans. 

"The majority of Canadians are already living in jurisdictions that don't allow anything more than $15 per hundred," he said. 

While the UARB has the right to set fees for payday loans, the other two recommendations in its 2022 report require provincial government approval. 

The first is that people who take out more than two payday loans in a two-month period should be given extensions of one or two pay periods to repay those loans. 

Service Nova Scotia, the department responsible for enforcing payday loan rules, rejected the same recommendation in 2015 as too onerous due to technical issues and privacy concerns. 

The board's second recommendation is for payday lenders to disclose the total number and value of loans Nova Scotians default on each year. 

Roberts says the public deserves more transparency, as lenders currently classify all late payments as 'defaults,' even if the loan is eventually paid off.

He says default rates are important because the board sets loan fees in line with the sector's profitability. 

"Everybody knows what the difference is between a loan that's never collected, and a loan that's a couple of days late," Roberts said. "It could have different implications in terms of how well the industry, the payday loan industry is doing."

Consultation ahead

The report indicates Service Nova Scotia is reluctant to take its advice. 

"Service N.S. indicated that it will have to conduct research and consultation with the payday lending industry before deciding whether to implement these two recommendations," the report said. 

Roberts is disappointed. 

"I think the board has said that the time for study is over and that this should be done. And that's something that we totally agree with." 

Meanwhile, Service Nova Scotia says it is committed to further talks with payday lenders.

"We look forward to reviewing the UARB's report," spokesperson Blaise Theriault wrote in an emailed statement. "Once we have reviewed, we will identify any necessary consultation and research before making a decision on next steps."