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Bill 43 (1 May 2007)

The Payday Loans Act

Second Reading
From Hansard - 1 May 2007

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Mr. Hart: — Thank you, Mr. Deputy Speaker. Mr. Deputy Speaker, I am certainly pleased that I’m able to enter into the debate on this particular Bill. This is a new Bill; it’s not an amendment to an existing Bill. It’s a Bill that deals with regulating an industry that is a fairly new industry of very short-term loans as the name infers, payday loans. And to the industry’s credit, I believe there was some initiative taken by the industry to ask for some regulation, Mr. Deputy Speaker, and I certainly concur with that opinion.

I think statistics will indicate that those people who are clients of the short-term payday loans are quite often people who may for whatever reason have some difficulty in managing their finances, whether that be due to lack of long-term, permanent employment, or perhaps it’s a situation of a case where particularly young people never really received the type of information that would enable them to manage their salaries and their income.

And so I think, speaking in generalities — I know when you generalize there’s always exceptions to the generality — but speaking in generalities, I think the vast majority of clients of this particular industry are very vulnerable and can be easily taken advantage of, Mr. Deputy Speaker. And therefore I think it is incumbent that governments act and set up safeguards so that the individuals are protected and also the industry knows what the regulations and rules of their business is. And that’s what this Act is attempting to do.

The minister outlined in his second reading speech a number of things that this Bill does. It requires the payday lenders to be licensed. It sets maximum limits as far as the costs. And the cost can be made up of a couple, at least a couple of things: interest rates and fees. And these can be very prohibitive. I understand that under certain . . . I believe it’s under the Criminal Code that the maximum interest rate cannot exceed 60 per cent. Well if you think of 60 per cent as a maximum interest rate, I mean that’s prohibitive. I don’t know of anyone that could possibly service a loan that is 60 per cent even though it may be very short, and I think in most cases these loans are very short.

So it also prevents lenders from making more than one loan to individuals which would minimize the risk to individuals. It also indicates that companies who have multiple places of business within the province, each one of those places of business must be licensed.

There is quite a number of provisions within the Bill. As you might know, Mr. Deputy Speaker, it’s quite a lengthy Bill. And from reading the Bill, it looks like, it appears that this Bill is the framework, but there are a lot of the detail which really will indicate the effectiveness of the Bill, will be developed in regulations, Mr. Deputy Speaker. And that certainly leaves us with some concern because, as the saying goes, the devil is in the detail.

And until we have some of those details . . . and I know there are some concerns both from the consumers but also from the industry. As I said, this is a new Bill, and I think there is more time is required, Mr. Deputy Speaker, to look into the various sections of the Bill, so that the stakeholders need, I believe, a bit more time to make their thoughts known, Mr. Deputy Speaker. And so at this time I would move to adjourn debate on this Bill.


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