The government is expected to soon launch a new round of consultations for an industry review, which began under the previous Tory government and is needed because the current payday loan regulations expire at the end of June 2016.
Service Alberta Minister Deron Bilous, whose department oversees the file, said an announcement is coming in the next few weeks.
While reluctant to provide details, Bilous acknowledged there are issues such as the rate of interest charged by the payday loan industry.
“It is a cause for concern and we want to make sure we’re protecting Albertans,” said Bilous, who is also the municipal affairs minister, in an interview at the Alberta Urban Municipalities Association convention last week. “I’m quite excited to look at different options.”
Payday loans are a short-term form of credit where people can borrow sums of money typically smaller than what traditional financial institutions would offer, with a limit of $1,500.
In Alberta, payday lenders are allowed to charge $23 per $100 borrowed, with the rate accrued over a short time. That amounts to a 600 per cent interest rate on a two-week $300 payday loan at the maximum rate of borrowing.
Brown noted the review of the payday loan industry is coinciding with tough economic times battering Alberta, triggered by a precipitous drop in oil prices.
“It is the working poor that get targeted by the businesses, so in the downturn you would expect more people to access payday loans, especially if they have lost their jobs or come into some economic insecurity,” he said Friday.
“So the downturn is really a boon for these types of businesses. They certainly cluster in low-income neighbourhoods in Calgary. So for a lot of people, that might be all they see for a lender.”
Officials with payday loan companies contacted by the Herald on Friday were not available for comment. The Canadian Payday Loan Association, which represents 20 licensed payday loan companies across the country, said it had no one available to speak on the provincial review.
NDP government to look at new rules for payday loans in Alberta | Calgary Herald
Service Alberta Minister Deron Bilous, whose department oversees the file, said an announcement is coming in the next few weeks.
While reluctant to provide details, Bilous acknowledged there are issues such as the rate of interest charged by the payday loan industry.
“It is a cause for concern and we want to make sure we’re protecting Albertans,” said Bilous, who is also the municipal affairs minister, in an interview at the Alberta Urban Municipalities Association convention last week. “I’m quite excited to look at different options.”
Payday loans are a short-term form of credit where people can borrow sums of money typically smaller than what traditional financial institutions would offer, with a limit of $1,500.
In Alberta, payday lenders are allowed to charge $23 per $100 borrowed, with the rate accrued over a short time. That amounts to a 600 per cent interest rate on a two-week $300 payday loan at the maximum rate of borrowing.
Brown noted the review of the payday loan industry is coinciding with tough economic times battering Alberta, triggered by a precipitous drop in oil prices.
“It is the working poor that get targeted by the businesses, so in the downturn you would expect more people to access payday loans, especially if they have lost their jobs or come into some economic insecurity,” he said Friday.
“So the downturn is really a boon for these types of businesses. They certainly cluster in low-income neighbourhoods in Calgary. So for a lot of people, that might be all they see for a lender.”
Officials with payday loan companies contacted by the Herald on Friday were not available for comment. The Canadian Payday Loan Association, which represents 20 licensed payday loan companies across the country, said it had no one available to speak on the provincial review.
NDP government to look at new rules for payday loans in Alberta | Calgary Herald
