Ontario Debates Payday Loan Bill - Part 2

Part 1 | Part 2 | Part 3

I have finally made it through the first round of debates on Ontario's proposed Payday Loan Act (Bill-48). As I alluded to in my first post on this debate, the views on this bill are quite diverse.

The Liberals and Conservatives (of the Progressive variety) showed a very clear level of support for the industry and used research from the Library of Parliament, Pollara and Environics to support their understanding of who payday loan customers are - recognizing them as the lower end of Canada's middle-income earners. They also made multiple references to the importance of competition, consumer choice and consumer responsibility and the lack of viable alternatives being provided by banks and credit unions. Lisa MacLeod went so far as to say that the Manitoba Public Utility Board's payday loan decision is "hurting consumers" because it is driving reputable organizations from the market.

The NDP, on the other hand, identified payday loan consumers as "the poorest people." While they acknowledged that payday loans are necessary, they believe that they should be provided by credit unions and can be provided at 28% APR - the equivalent of charging $1 on a $100 loan for 14 days.

To repeat an earlier post, the best national data available shows that it costs at least $20.66 to issue a $100 payday loan. Also, those borrowers in the UK who do not have access to a licensed lender pay an average of £200 for a £100 loan.

While any payday loan consumer would love to pay $1 for a $100 loan, if the product is not available to them at that rate then their next best option, if you believe the UK to be a reasonable proxy, is significantly higher. Fortunately for payday loan consumers, the Ontario Liberals and Conservatives get it.