“I would prefer that the big banks offer the services offered by payday loans, but on more reasonable terms,” says Coun. Claire Riepma
Barrie payday lending establishments will attract the kind of interest they can do without.
City council passed a motion on Monday evening asking staff to study the possibility of allowing payday lending establishments under the general business licensing by-law to restrict their number and concentration throughout Barrie.
And as part of the zoning by-law review, staff will also review the current minimum separation distance provisions for the use of tattoo parlors, body piercing parlors, pawn shops and establishments. payday loan.
City staff would then report on both requests.
Com. Keenan Aylwin, who represents the downtown area where many payday lending establishments have operated, said other cities have shown Barrie what can be done.
“I hope we can reduce the number and concentration of these predatory payday lending establishments in the city, like other municipalities have done,” he said. “For example, the City of Guelph recently voted to restrict the number of these establishments to one per ward.
“This could help protect residents and our neighborhoods from the abuse of their exorbitant interest rates,” Aylwin added. “It’s about building strong neighborhoods and supporting the people who need it most. “
Com. Clare Riepma said he was interested to see what recommendations city staff would have after investigating the matter further.
“While the new regulations would not affect existing payday lending operations, I believe that a licensing system as well as an appropriate separation distance would help reduce the impact of these uses,” he said. declared.
“I recognize that there are people who depend on these services. Usually these people are the most economically vulnerable, ”Riepma added. “I would prefer that the big banks offer the services offered by payday loans, but on more reasonable terms. “
Phillip Wilkins, of Barrie, has worked in the financial services industry for over 20 years, the last 11 with a nonprofit credit counseling niche, and also as a certified educator. He said he applauds any discussion and movement to eliminate payday lenders.
“We need to at least severely limit them,” he said. “Whether I’m counseling or educating, payday loans are about 80-90% of the problem we have to solve, as well as many questions in our financial presentations.
“The actual cost of an average payday loan can be expressed in terms of an interest rate greater than 400 percent,” Wilkins added. “And yes, the most financially vulnerable are most often the collateral damage. ”
The province granted municipalities the power to restrict payday lending establishments in 2018. Barrie’s zoning bylaw already provides for a minimum separation distance of 100 meters for payday lending establishments in the city center.
The Financial Consumer Agency of Canada, an arm of the federal government, defines a payday loan as a short-term loan with high fees that make it a very expensive way to borrow money. Up to $ 1,500 can be borrowed, but the loan must be repaid on the borrower’s next paycheck, according to the agency. Borrowers have up to 62 days to repay in Ontario, Manitoba, New Brunswick, Alberta and British Columbia.
Payday loans are meant to cover a cash flow shortfall until the borrower’s next salary or for a short period, depending on the agency. These loans should be avoided for everyday expenses such as rent, groceries, or utility bills. Private companies offer payday loans in stores and online.