Ontario is introducing legislation to help protect Ontario’s most vulnerable consumers.

The new Payday Loans Act, if passed, will enhance consumer protection by licensing all payday lending industry operators and banning controversial lending practices.

In a continuing effort to protect Ontario’s most vulnerable consumers in need of short-term loans, a process to place a cap on total costs of borrowing, an inspection and enforcement regime and an education campaign will empower consumers to make informed decisions and ensure integrity in lenders’ borrowing practices.

An independent advisory board of experts, business representatives and poverty advocates will examine the costs for payday loans and recommend a cap on total costs of borrowing.

The proposed act would also:

• Require lenders to include in the total cost of borrowing all charges the consumer is required to pay.
• License all payday lenders.
• Allow borrowers to cancel agreements during a cooling-off period.
• Require operators to contribute annually to a public education fund on payday lending.
• Create enforcement through inspections, charges and license suspensions.

QUOTES

“We want payday lenders in Ontario to be ethical and accountable, and the new Payday Loans Act is another important step in protecting Ontario consumers who use this service,“ said Ted McMeekin, Minister of Government and Consumer Services Minister.

“This proposed legislation will help shut the door on payday loan businesses that take advantage of poor families’ vulnerability,” said Deb Matthews, Minister of Child and Youth Services.

 
QUICK FACTS

• A payday loan is a short-term high-interest loan, typically marketed as easy cash to cover costs until the borrower’s next payday.
• There are between 600 and 700 payday loan operators in Ontario.
• Payday loan users are younger than the general population and have average incomes ranging from $35,000 to $41,000. 
• On an average day, payday lenders make 16 loans of $300 apiece. That’s about $1.5 million in loans over an entire year.

LEARN MORE

Read more about Ontario’s efforts to help protect consumers www.ontario.ca/consumerprotection

Looking for advice on how to help manage your debt, visit www.creditcanada.com

Read more about Ontario’s payday lending industry at the Canadian Payday Loan Association’s website www.cpla-acps.ca

Backgrounder: Payday Loans Act, 2008

Greg Dennis,
Minister’s Office,
416-327-3072

Ciaran Ganley,
Communications Branch,
416-325-8659