Hamilton to consider limiting payday loan outlets

On Tuesday, the city will be look at a new law that would limit the number of payday loan outlets at 15 and no more than one per ward.

As of Jan. 1, the province brought in new rules under Bill 59, the Putting Consumers First Act, allowing local municipalities to regulate the location and number of payday loan establishments. On Tuesday, Hamilton will look at doing just that.

Currently, the city licenses 30 payday loan establishments.

Existing businesses would be grandfathered in with the new bylaw.

According to the proposed bylaw, "It also recognizes and permits the 30 locations, where establishments currently licensed with the city, may operate provided the premises continues to be used for such purposes, the business owner maintains their licence and the business carried on therein is in compliance with this by-law."

Putting the payday loan industry on 'notice'

Tom Cooper, Hamilton Roundtable for Poverty Reduction director, says the bylaw would enable people to look at other options for when they run into a financial emergency and says city council is taking a leadership role.

"By taking this step, Hamilton is really putting the payday loan industry on notice that their days of exploiting vulnerable consumers are at an end," said Cooper.

"It's an industry that's predatory and we want to do everything we can to ensure that their aggressive tendencies are curtailed and if that means preventing more outlets from opening up, that's good and if it means rolling back the ones that exist, that's even better," said Cooper.

In Hamilton, high-cost lenders are clustered around Wards 2 and 3 – downtown and the central lower city, Cooper previously told CBC News.

As reported by CBC News last month, Tony Irwin, president and CEO of the Canadian Consumer Finance Association, previously known as the Canadian Payday Loan Association, said there's no concerted effort to set up around low-income areas.

"Our industry locates their businesses much the same way retail establishments do," he said. "They go to where the people are. They go to where there's space. They go to places that are well traveled, and where the customers are."

More changes to come

In addition to expanding the municipality's authority, Bill 59 also includes the following additional regulatory changes, which remain under the provincial regime that will come into force on July 1, 2018:

• Mandatory extended payment plan for borrowers with three or more loans with the same lender within a 63-day period.
• Loan limit of 50 per cent of a borrower's net pay per loan.
• The cost of borrowing a payday loan must be disclosed as an annual percentage rate in advertisements and agreements.
• Maximum fee for cashing government-issued cheques capped at $2 plus one per cent of the face value of the cheque, or $10, whichever is less.
• Mandatory provision for a receipt when cashing government-issued cheques.