Education, Better Options Key to Ending Vicious Payday Loan Cycle
LETHBRIDGE – New legislations around pay day loans seem to be benefiting Albertans.
The Community and Social Development (CSD) Committee made a report to Lethbridge City Council on Monday. It noted that Lethbridge has ten licenced payday loan institutions, and that Alberta now has the lowest fees across Canada at $15 on every $100 borrowed.
Bill 15: An Act to End Predatory Lending was announced by the Government of Alberta on August 2, 2016, in an effort to end the vicious debt cycle.
Phase one of the new regulation states that:
– borrowers are allowed to repay loans in instalments;
– lenders must offer financial literacy resources;
– lenders cannot soliciting potential customers;
– all fees must be included in the cost of borrowing;
– lenders cannot charge a fee to cash a cheque;
– agreements cannot be solicited, negotiated or concluded for another form of credit if a payday loan is already outstanding
After accepting the report and hearing other recommendations, Councillor Jeff Carlson says CSD and Vibrant Lethbridge will begin work with mainstream financial institutions to offer even better debt education.
“There’s certain institutions here that already offer this training. Our committee would like to coordinate between all the groups, and getting better schedules and advertising so these training sessions can be better attended.”
The two committees will be working to find better options to payday loans, as well, like lower interest micro-loans and helping those in need open bank accounts.
Phase two of Bill 15 should begin this November. Those changes will include:
– no penalties for early payback;
– providing more specific information on financial literacy;
– prohibiting lenders from amending pre-authorized debit agreements without express consent;
– limiting lenders to the initial attempt to use pre-authorized debit and the single additional attempt under the Canadian Payments Association.
There are 30 payday loan companies operating more than 220 branches across Alberta.
