Poverty advocates rejoice as interest on payday loans capped in federal budget
It's the news poverty advocates have been waiting for.
The Government of Canada will introduce changes to the Criminal Code by lowering the criminal rate of interest from the equivalent of 47 per cent to 35 per cent annual percentage rate (APR).
"It’s exciting when they finally started to listen,” said Donna Borden, a national ACORN leader and a champion of ACORN’s fair banking campaign.
“We’ve had 300-to-400 people going into a bank protesting and going into these places and protesting over and over and over again and eventually they said, ‘Oh, you know what they [federal government] are right, something should be done.”
Betty Morrison is a London, Ont. resident who has been struggling to get out of debt for two decades after signing up for an initial high interest cash advance
“I just keep getting roped into those places,” explained Morrison, who said she’s needed money for family medical issues, animal issues and to move out of an unsafe apartment on short notice.
Many Canadians like Morrison are not approved for lower interest bank loans, and have no choice but to sign up for quick cash installment loans with interest up to 60 per cent annually.
“When you are on ODSP you barely can get food or shelter,” she said.
ACORN London staged a protest in London, Ont. on Jan. 24, 2023 in relation to high-interest loans. (Gerry Dewan/CTV News London) The Canadian Consumer Finance Association (CCFA), which represents hundreds of lenders, said they are “deeply disappointed” by the measures set out in the budget. They claim installment and short-term payday loans are an essential service to Canadians who have been refused credit by traditional banks.
“While it makes a good headline, the effect of the government’s action will not make credit more affordable,” the CCFA told CTV News London in a statement. “Instead it will have the effect of excluding access to credit to those Canadians on the bottom rungs of the credit ladder.”
The CCFA added payday lending is licenced and regulated in each province. The maximum lending rate is set by each province after careful consultation and review by that provincial government.
“The intrusion by the federal government on provincial jurisdiction to set maximum lending rates for payday loans without any research or consultation is bad public policy,” said the CCFA. “It will drive Canadians to illegal unlicensed online lenders who provide loans at higher rates and with no consumer protections.”
ACORN Canada feels capping the APR will save Canadians millions of dollars.
“It shows that it pays to keep speaking up, and fighting for something,” said Borden of their tireless and relentless advocacy.
ACORN and Morrison both wanted to see rates as low as 30 per cent, but feel this is a big step in the right direction.
I don't want to see them again, but it will help other people,” said Morrison, who hopes to never have to set foot in a lender again. “Anyone who needs support at least they don’t have to pay that interest.”
The government has also committed to launch consultations to see if the APR can be further reduced.
CTVNews.ca Top Stories
Work stoppage possible as WestJet issues lockout notice to maintenance engineers' union
A lockout notice issued by WestJet to a union representing aircraft maintenance engineers could result in a work stoppage next week.
'I just can't believe that it took so long': Body found in wreckage 3 months after deadly fire
A man accused of arson in a January Old Strathcona apartment fire is expected to be charged with manslaughter after a body was discovered in the burned building late last month.
No proof man lied to brother about number of kittens born in litter, B.C. tribunal rules
A man was denied a $5,000 payout from his brother after a B.C. tribunal dismissed his claim disputing how many kittens were born in a litter.
Bodies recovered in Mexico likely 2 Australians, 1 American who went missing: officials
Three bodies recovered in an area of Baja California are likely to be those of the two Australians and an American who went missing last weekend during a camping and surfing trip, the state prosecutor’s office said Saturday.
BREAKING London Drugs begins 'gradual reopening' on 7th day after cyberattack
Almost a week after all London Drugs stores across Western Canada abruptly closed amid a cyberattack, they began a "gradual reopening" on Saturday.
Quebec police hand out hundreds of tickets to Hells Angels and other bikers before 'first run' meeting
Quebec provincial police handed out hundreds of fines to Hells Angels members and other supporting motorcycle clubs who met for their 'first run' in a small town near Sherbrooke, Que.
Auston Matthews skates ahead of Game 7, status unclear with season on the line
Auston Matthews was back on the ice with his teammates Saturday.
Russia puts Ukrainian President Zelenskyy on its wanted list
Russia has put Ukrainian President Volodymyr Zelenskyy on its wanted list, Russian state media reported Saturday, citing the interior ministry’s database.
Snakes almost on a plane: U.S. TSA discovers a bag with small snakes in passenger's pants
According to an X post by the Transportation Security Administration, officers at the Miami International Airport found the small bag of snakes hidden in a passenger's trousers on April 26 at a checkpoint.