Payday Loans Are ‘Ungodly’ Says Canada’s Finance Committee Chair

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Parliament has a problem with payday loans.

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“What is the regular interest rate on payday loans?” It is desperately, desperately high, ”said MP Wayne Easter (Malpeque, PEI) on Tuesday, according to Blacklock reporter.

Easter is the Liberal chair of the House of Commons finance committee.

“You pay high fees. The cost can be equivalent to an interest rate of 500 or 600%. It is wear and tear. It is ungodly. I know they’re legal but, man, we’ve got to do something about it, ”Easter said.

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New data has shown that 8% of lone parents in Canada borrow money at criminal interest rates.

The Criminal Code prohibits interest rates above 60% per annum. However, Parliament exempted payday lenders from the Usury Act in 2007 and left the regulation to the provinces.

In 2018, the Senate Banking Committee determined that interest on a two-week loan of one hundred dollars could be charged $ 31, the equivalent of 800% per annum. The Usury of Parliament Act has not been rewritten since 1978.

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According to Blacklock reporter, Ruth Stephen, research director for the Financial Consumer Agency of Canada, said that although 2% of Canadians are payday borrowers according to a 2019 federal financial capability survey, the percentage is increasing for ” specific vulnerable sub-groups ”.

“For example, 4% of low-income households use payday loans,” Stephen said. “It’s 8% Aboriginal and 3% less educated, and 8% single parents.

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“I am absolutely shocked that there are 8% of native people and 8% of single parents who use payday loans,” Easter said. “I never realized it was anywhere near there.”

A Liberal Bill S-237 An Act to amend the Criminal Code to cap all interest, including payday loan rates at 45%, lapsed in the last Parliament. Similar bills failed in 2015 and 2005.

Courts in Ontario, British Columbia and Alberta have consistently ruled against payday lenders because the rates are so high.

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