If a new report is taken seriously, then Toronto will start to license payday loan stores, and cap the number of those operating in Toronto at 207, the current number of outlets already licensed by the province.
New provincial regulations that were enacted earlier this year has granted municipalities more power to regulate payday loan store locations.
Poverty reduction advocates have for years been complaining about the predatory loan sharks that are causing the poor and financially vulnerable to get further into debt.
People who borrow money from payday loan outlets can find themselves saddled with fees of 390 per cent, far higher than those on a credit card, the city report notes.
The report from the city’s Municipal Licensing and Standards department recommends the city adopt the same fee structure for payday loan stores as pawn shops and precious metal shops.
This would mean outlets would pay roughly $630 for a licence, or $300 for the annual renewal, on top of the fees already paid to the province.
Payday loan companies are best seen as necessary evils because banning them from the market entirely would mean higher-cost or black-market alternatives would fill the gap. It would end up driving the business underground where the government would have no control over how such loans are dispensed at all.
There are many benefits to capping the number of outlets, although it is clear that it really does little to help people who need loans.
Perhaps educating the poor about budgeting and finance may actually make them more aware about the dangers of spiraling debt. But then again, the biggest problem is the hardest to fix- getting them better paid jobs which require skills and more education. – CINEWS