A provincial panel will begin hearings in Winnipeg today to establish limits to the fees so-called payday loan companies, such as Money Mart and Rentcash, can charge their customers.
Over the next month, the three-member panel of the Public Utilities Board will hear from payday loan industry representatives, as well as groups representing students, seniors, women and the underprivileged.
At issue will be the maximum amount that can be billed by companies that issue short-term loans. Currently, that amount can dwarf what a bank or credit union charges.
1.5 million
The Public Interest Law Centre, a branch of Legal Aid Manitoba, estimates a person taking out a $250, 12-day loan from a payday loan company can expect to pay between $44 and $109 in fees, or between 535 and 1,321 per cent, when the amounts are translated into an annual rate.
About 1.5 million people across Canada take out loans from payday loan companies annually, according to the Canadian Payday Loan Association, which represents major industry players.
"I think it appears to be of quite a bit of significance to ordinary people," said PUB counsel Anita Southall. Looking at the speakers' list, "there does appear to be quite a bit of interest in the work that the PUB is embarking on," she said.
While the payday loan industry is itself divided on the matter of maximum fees, community interest group advocates want to see charges brought closer to those at mainstream financial institutions.
"An acceptable fee has got to be something in keeping with the norms of credit," said David Northcott, executive co-ordinator of the Winnipeg Harvest food bank.
"There should be a way of doing an advancement that charges (payday loan users) a fair market rate," Northcott said. "Several percentage points above prime would be reasonable. But to be able to jump way above that and to compound it monthly or to compound it weekly is just not acceptable."
The Public Interest Law Centre is representing Winnipeg Harvest and two other organizations before the board.
The hearings take place at the PUB's fourth-floor hearing room at 330 Portage Ave. Eight interveners from the payday loan industry are appearing before the panel. Other people representing interest groups and community organizations are also expected to testify. The last hearing date is tentatively scheduled for Dec. 18. The PUB has the authority to set the maximum fees payday loan companies can charge borrowers and it could also make general recommendations to the province on regulation of payday loan lenders.
The PUB held hearings earlier this month in Thompson and Brandon, although no one appeared before the panel. Manitoba is among a handful of provinces at the forefront of establishing consumer legislation to protect payday loan customers by setting caps on the amounts payday lenders can charge.
joe.paraskevas@freepress.mb.ca
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