Reaction to the Manitoba Decision

I will put together some background information on what is happening on the Manitoba regulatory front shortly, but first I would like to share some reaction to the Manitoba Public Utility Board's long awaited ruling on April 4. Among other things, the Board decided that the most a lender can charge for a payday loan in Manitoba is 17% of the first $500, 15% of the next $500 and 6% on any amount over $1000. The British Columbia Payday Loan Association was quick to point out that the Manitoba decision will likely force the closure of all small and medium-sized lenders in that Province (see BCPLA press release). The Canadian Payday Loan Association saw things much the same way (CPLA release).

The Consumers Association of Canada, Manitoba Branch, commented that the rate cap should be viewed favourably by consumers: "While payday loans are still very expensive, Manitoba consumers can expect to save between 20 per cent and 50 per cent on what they currently pay."

Unfortunately the nuances of how the market will react to this new cap may have been overlooked by the Public Utility Board. On the one hand, rates will be lower, but on the other hand, there will be fewer lenders offering the service. Dollar Financial, parent company to Money Mart, was certainly pleased with the ruling (DLLR release) because they are fully capable of operating in this rate environment. The question is, who else can operate at these rates and what happens to the consumers who don't qualify at Money Mart?