Different needs, different options

Those who travel through the city will often find financial institutions that advertise easy access to loans, cheque cashing, and other services. These services are particularly attractive for those who shy away from traditional banking due to their legal status.

As we to try to understand how these services work, we deemed it important to speak with the Canadian Consumer Finance Association, an organization which works with the federal and provincial governments to achieve a regulatory framework that protects consumers while allowing for a viable industry to continue.

Milénio Stadium: What type of services do Canadian Consumer Finance Association members offer?

Canadian Consumer Finance Association: CCFA members provide a range of financial services to Canadians including payday loans; installment loans and lines of credit; cheque cashing; western union; foreign exchange and bill payment services.

MS: A lot of people go for payday loans. How does it work?

CCFA: The borrower applies for a loan with the lender and provides a pay stub or other acceptable proof of income; a bank statement and signs a pre-authorized debit agreement or post-dated cheque to repay the loan on the borrowers next payday.

MS: What kind of fees are applied?

CCFA: The maximum fee for a payday loan as set by the Ontario government is $15 per hundred borrowed. For example, if a borrower takes out a payday loan for $300, the amount they repay the lender on their next payday is the $300 loan, plus a $45 fee.

MS: What type of consumer protection do you offer?

CCFA: Payday lenders are licensed and regulated under specific provincial payday loan legislation. Lenders are inspected by the Ministry of Government and Consumer Services to ensure they comply with all applicable laws and regulations. Many municipalities also require payday lenders to be licensed and conduct inspections.

MS: Why should people look for help with one of your members instead of a bank, for example?

CCFA: For many Canadians, a payday or installment loan is the only source of credit available to them. Where other financial institutions have turned them down, our members are there to provide credit to the single mother so she can pay her rent or feed her kids, or a senior who might need a few hundred dollars to pay for medicine until their pension money comes in.

MS: We know there’s a lot of online lenders who follow no regulations and put vulnerable people at risk, with financial and privacy violations. How can this be controlled and what can be done to protect those who use their services?

CCFA: The best thing consumers can do is find out whether a lender is licensed before applying for a loan. Too often we hear stories of people borrowing from unscrupulous operators who aren’t licensed and don’t comply with any Canadian laws or regulations. Consumers can go to the CCFA website at www.canadiancfa.com for a list of licensed lenders.

MS: Did Covid-19 pandemic increase your number of clients?

CCFA: The global pandemic has been extremely challenging for many businesses, including payday lenders. The number of loans advanced has dropped dramatically which coincides with significant job losses experienced by many Canadians. Our members continue to work with their customers who need access to short term credit or need to cash severance or government assistance cheques. 

Catarina Balça/MS