In 2017, new provincial legislation in Ontario gave municipalities more power to regulate predatory loan businesses. The new rules allowed local governments to take leadership where senior levels of government have faltered. Here is what one municipality did.
Hamilton Steps Up
The City of Hamilton had a population of 536,917 in 2016. Hamilton bills itself as “the best place to raise a child and age successfully.” Community advocates have long been concerned about the economic violence inflicted by predatory lenders on individuals, families and the community as a whole.
Tom Cooper, Director of the Hamilton Roundtable for Poverty Reduction, was one such advocate.
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| Tom Cooper |
“Profiteering is a derogatory term applied to those in business who make profits through methods that, while not illegal, could certainly be considered unethical,” says Cooper. “Payday lenders sure seem to fit the description of profiteers.”
In 2015 Cooper decided to try to shine a bright light on the industry in Hamilton.
Cooper began to work with city council and particularly Councillor Matthew Green whose downtown Ward was home to many payday loan businesses. In fact, Green calls the targeting of inner city neighbourhoods by the payday loan industry “pernicious.”
“We had more payday loaners in some kilometres than Tim Hortons,” Green told local media in 2015. Estimates of the numbers operating in Hamilton were as high as 35.
Cooper and Green worked together to bring in the province’s first municipal licensing of payday loan outlets in Hamilton. That meant these lenders were required to provide city sanctioned information on credit counselling to anybody coming in their doors. The new licensing required lenders to display large posters that contrasted the actual interest rates of a payday loans with the interest rates of chartered bank loans. They also had to pay a licensing fee.
But more was needed. Cooper and Green strategized. Then, early in 2018, Green brought forward a motion to restrict these businesses to 15 in total (one per ward) but grandfathered existing locations. He received strong support from council colleagues.
The by-law was amended.
Here is what it said.
The Hamilton By-law in a Nutshell
Licensing
• Every payday loan business shall hold the applicable current and valid licence. Before a licence is issued, every applicant shall submit:
(a) a current and valid licence as a lender or loan broker under the Payday Loans Act.
(b) accurate, scale representations of the posters that will be displayed.
(c) the credit counselling information that will be given.
• No new payday loan business shall be issued a licence for a location where payday loan businesses were located when the by-law was passed.
• No more than15 payday loan business licenses shall be issued and no more than one payday loan business licence shall be issued per ward.
Rates Poster
Every payday loan business shall display a poster at each office, approved in advance by the Issuer of Licences. The poster shall be in English and visible to any person immediately upon entering the office.
The poster must be a minimum size of 61 centimetres in width by 91 centimeters in length; and must lay out the amount of the payday loan business’s annual interest rate and rates of chartered banks.
Credit Counselling Poster and Information
A Credit Counselling Poster must be displayed that lists specific contacts with their respective telephone number and email addresses.
Every business shall ensure that each person who attends at its offices is given, immediately upon him or her expressing an interest in a loan, approved credit counselling information.
What You Can Do?
• Consider contacting a member of your local city or town council. Ask them to initiate a similar bylaw in your town.
• Advocate for alternatives. For example, the Hamilton Community Legal Clinic has called for a return to postal banking where basic financial services, like credit, could be available without exorbitant fees charged by payday loan companies at the Post Office.
