Toronto to clamp down on payday lenders
The war against payday lenders rages on, with a new report suggesting that Toronto should place a cap on the number of operational outlets at its current 207.
Penned by Brian Dijkema, Program Director for work and economics at Hamilton-based think tank, Cardus, the report follows in the footsteps of movements in other Ontario cities to crack down on payday loan providers.
The city of Hamilton recently introduced a new law that would limit the number of payday loan outlets in the city at 15, with no more than one per ward. People who borrow from these lenders can find themselves left with fees of up to 390% of their loan, that’s way higher than a credit card.
Withfurther research confirming that insolvent borrows are now 2.6 times more likely to have at least one payday loan outstanding when they file a bankruptcy than in 2011, it seems Ontario residents are leaning on these payday loans more than ever before.
Coun. Joe Mihevc, city council's poverty reduction advocate, describes these businesses as a "predatory industry," and supports the move towards fewer outlets in the city. "We all know that it's usually very desperate people who go to these payday loan locations," Mihevc said. "And the way they situate themselves is in areas where there is increasing poverty."
The report from the city's Municipal Licensing and Standards department says the solution is for Toronto to implement a similar fee structure for payday loan stores like those used by pawn shops and precious metal shops. It would see payday loan providers paying around $630 for a license, or $300 to renew each year, on top of the fees they already pay to the province.