One city considers limits on payday loan outlets

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This week Hamilton took the step that has undoubtedly got the attention of other cities who may be considering such a move. The city is looking at a new law that would limit the number of payday loan outlets at 15 and no more than one per ward.

Since January 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.

Existing businesses would be grandfathered in with the new bylaw.

This move is expected to encourage people having trouble paying off their loans to look at better options when confronted with financial challenges.

Payday loans tend to be setup in neighborhoods where poverty is often an issue. The temptation to settle loans by going into such a loan establishment is simply too much for many desperate and vulnerable people who find themselves deep in debt and unable to get out of it.

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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.

But looking at the issue from another angle, the move by cities to limit the number of payday loan outlets sounds a lot like soft paternalism and an effort at social engineering.

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Taking away choices from any individual because it could harm them could mean also limiting or getting rid of LCBOs in certain low-cost housing neighborhoods because the lure of alcohol is too much for desperate and vulnerable unemployed or poor people. Or it could mean getting rid of all junk food and processed foods from grocery stores located in regions where obesity and diabetes is a health risk. It just never ends and well-meaning efforts to help people could simply end up curtailing one’s freedom and choices.

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