Payday loans “ungodly”, according to the chairman of the Canadian finance committee

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Parliament has a problem with payday loans.

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“What is the regular interest rate for payday loans? It is desperately, desperately high,” MP Wayne Easter (Malpeque, P.E.) said Tuesday, according to Blacklock Journalist.

Easter is the Liberal chair of the House of Commons finance committee.

“You pay high fees. The cost can be equivalent to an interest rate of 500 or 600%. It is wear. It is impious. I know they’re legal but, man, we gotta do something about it,” Easter said.

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New data has shown that 8% of single parents in Canada are borrowing money at criminal interest rates.

The Criminal Code prohibits interest rates greater than 60% per annum. However, Parliament exempted payday lenders from the usury law in 2007 and left regulation to the provinces.

In 2018, the Senate Banking Committee determined that interest on a two-week $100 loan could be charged at $31, or the equivalent of 800% per annum. The Usury of Parliament Act has not been rewritten since 1978.

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According to Blacklock Journalist, Ruth Stephen, director of research for the Financial Consumer Agency of Canada, said that while 2% of Canadians are payday borrowers according to a 2019 federal financial capability survey, the percentage increases for specific vulnerable subgroups”.

“For example, 4% of low-income households use payday loans,” Stephen said. “It’s 8% Aboriginal and 3% less educated individuals, and 8% single parents.

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“I’m absolutely shocked that 8% of aboriginals and 8% of single parents are using payday loans,” Easter said. “I never realized it was near there.”

A Liberal Private Bill S-237 An Act to amend the Criminal Code to cap all interest, including payday loan rates at 45%, lapsed in the last Parliament. Similar bills failed in 2015 and 2005.

Courts in Ontario, British Columbia and Alberta have regularly ruled against payday lenders because the rates are so high.

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