Low-income BC advocacy group calls for tougher payday loan regulations

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The first time Desiree Wells took out a payday loan in 2001, she needed the cash quickly to cover an unexpected vet bill for her cat.

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“This loan still haunts me,” Wells, 36, said Monday. “It’s just a trap. It is literally a nightmare and it is a vicious cycle.

Tuesday at noon Wells will attend a gathering in front of a Money Mart store at Commercial Drive and East 10th Avenue, with members of BC ACORN, a group representing low and moderate income families across Canada. An ACORN statement said the rally aimed to pressure the BC government to “crack down on predatory loans in BC”

Wells, who has an artificial leg that limits his ability to work, receives disability assistance and earns “a little extra money” by designing and selling jewelry. She has friends who have used payday loans, she said, and none have had positive experiences.

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ACORN wants the BC government to change the laws regulating the payday lending industry, including reducing the maximum rates charged, currently up to $ 23 per $ 100 borrowed.

These rates can amount to paying 500 percent or more per year, depending on a January report from Vancity. According to the report, British Columbians are using payday loans at an increasingly higher per capita rate than the rest of the country.

British Columbia NDP spokesperson Carole James raised the issue in the legislature last month, calling the Vancity report’s findings “shocking” and adding: “Annualized percentage rates are outrageous and pushing. families get more and more into debt.

James urged the Liberal government to explain why he had not kept “an election platform promise … in 2013 to reduce the maximum interest payable on payday loans”.

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In an emailed statement Monday, a spokeswoman for the Solicitor General’s ministry said staff are working on a proposal to revise BC’s payday lending regulations, which is expected to be provided to the minister of here the end of the year.

The industry has come under criticism recently, including in the United States, where this month the Consumer Financial Protection Bureau released a proposal to regulate payday loans.

Last month, the Government of Alberta introduced “An Act to End Predatory Lending“, A bill proposing” to make substantial changes to the payday lending industry, including the lowest lending rates in the country, “the government said.

But the changes in Alberta could have unintended consequences, said Tony Irwin, president of the Canadian Payday Loans Association.

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“In Alberta, what they have done will be devastating for the industry, but more importantly, it will result in denial of access to some borrowers who need payday loans,” Irwin said Monday.

“These changes will force consumers to turn to the illegal and unlicensed industry,” Irwin said, adding that many illegal loan companies operate online and are based “abroad, outside any Canadian jurisdiction. “.

“When regulations are too restrictive, forcing some of the approved lenders out of business, the need for credit doesn’t go away. So these borrowers are going to go somewhere to find it, ”Irwin said.

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– with a file by Rob Shaw

Five things to know about payday loans in British Columbia

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Payday loan companies offer short-term, low-value loans at high fees to people who need quick cash. In British Columbia, payday lenders can charge up to $ 23 for every $ 100 borrowed.

These rates can amount to paying 500 percent or more per year, according to a Vancity January Report. According to the report, British Columbians are using payday loans at an increasingly higher per capita rate than the rest of the country.

Between 2012 and 2014, according to the report, the number of payday loan borrowers in British Columbia increased by 58%, according to the report, and the size of the industry grew from around $ 318 million to over of $ 385 million.

The industry has recently come under heavy criticism. In the United States, federal regulators are trying to crack down on payday lenders.

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A proposal to regulate U.S. payday lenders was unveiled this month by the Consumer Financial Protection Bureau, including Director Richard Cordray told the New York Times that the payday loan industry “is kind of like getting in a cab just across town and getting stuck on a ruinous and expensive trip across the country.”

British Columbia NDP spokesperson Carole James raised the issue last month in the legislature, calling the Vancity report’s findings “shocking,” adding: “Annualized percentage rates are outrageous and pushing. families get more and more into debt.

James urged the Liberal government to explain why it had failed to keep “a promise in the government’s 2013 election platform to reduce the maximum interest payable on payday loans.”

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In an emailed statement, a spokesperson for the Ministry of the Solicitor General said Monday that “staff are working on a proposal to revise the province’s payday lending regulations, which is expected to be provided to the minister here. the end of 2016 “.

A statement released on Tuesday by ACORN said that their members “want the government to change its seven-year-old legislation to include regulations that will tackle online lending, extend repayment periods without penalties, and develop a database that would prevent repeat users from falling into vicious circles of indebtedness. “

The industry has recently come under criticism, particularly in the United States, where the Consumer Financial Protection Bureau this month released a proposal to regulate payday lending.

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Last month, the Government of Alberta tabled “An Act to End Predatory Lending,” a bill proposing to change the maximum borrowing rates to the lowest in Canada.

The head of the Canadian Payday Loan Industry Association says changes in Alberta could have unintended consequences.

Tony Irwin, president of the Canadian Payday Loans Association, said the changes in Alberta “will be devastating for the industry, but more importantly, they will lead to denial of access to some borrowers who need loans on loan. salary.

“These changes will force consumers to turn to the illegal and unlicensed industry,” Irwin said.

ACORN BC plans a rally on Tuesday calling on the government of British Columbia to “stop predatory lending in British Columbia”. The rally will begin Tuesday at noon in front of a Money Mart store at Commercial Drive and East 10th Avenue.

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