EDMONTON — Alberta’s NDP government says it plans to introduce a bill to crack down on payday loan companies.
An Act to End Predatory Lending would protect vulnerable people from paying exploitative interest rates on payday loans and spiralling into poverty, Service Alberta Minister Stephanie McLean said Wednesday.
“Albertans, more than ever, are needing to ensure that their finances are well managed and that means they can put food on their tables and pay for the roofs over their heads,” she said.
“They are looking to us to provide some consumer protection for them, and payday loans unfortunately put many Albertans into a cycle of debt they can’t get out of.”
Details of the bill, which is to be introduced in the coming weeks, were not released.
A regulation that Alberta brought in to govern the industry in 2009 expires the end of June.
McLean would only say that Albertans have told the government that they want lower interest rates, more time to pay back what they borrow and limits on how much cash payday loan companies can lend.
The government is basing its position on the results of an online survey done late last year.
McLean said the name of the bill reflects feedback received from Albertans about the industry.
“We have heard that this is the way that they are feeling about the way that the industry has been acting.”
Payday lenders in Alberta can now charge $23 per $100 borrowed, the second-highest rate in Canada.
Prince Edward Island allows the highest fee at $25. Manitoba is the lowest at $17.
Alberta says the annualized percentage rate on a two-week payday loan can run as high as 600 per cent interest.
An industry group called the Canadian Payday Loan Association said it is concerned about the name of Alberta’s planned legislation and its intent.
Tony Irwin, the association’s chairman, said it met with the province last fall about possible regulatory changes.
“We are a licensed and regulated industry in seven provinces,” Irwin said from Toronto. “To have a bill entitled that way is certainly a concern.”
There are 36 payday loan companies operating 236 outlets in Alberta. The association represents 11 of the companies that run 195 of the outlets.
Irwin said the industry has told the government that making new regulations too strict could force some payday loan companies to close.
That would force people who need loans to approach illegal lenders, including a growing number who operate online, he said.
“The demand doesn’t go away,” Irwin said.
“People who require credit will still require it and they will find it from someone who is not licensed by the province.”