Statistics Canada Releases Payday Lending Report
Findings Confirm ACORN Canada's Criticism of the Industry

For Immediate Release: Friday, April 20, 2007

Ottawa – In a report released this morning on payday loans, Statistics
Canada has made the case for reigning in the payday lending industry even
stronger.

“ACORN Canada is calling on provinces that are regulating the industry to
impose an upper limit of 60% interest on payday loans” says Evan Soikie of
ACORN Canada. He notes that new federal legislation is delegating
regulation of the industry to the provinces, and many have enacted (or
introduced legislation) that curtails payday loan-sharking, including
Manitoba, New Brunswick, Nova Scotia, Saskatchewan, and BC. However,
provincial legislation has yet to specify what the upper limits on
interest rates will be.

“We need economic options, not exploitation,” continues Soikie, who notes
that in recent years banks have closed many branches in low income
communities, and the void has been filled by payday lenders. Between 2001
and 2003 alone, 700 bank branches closed across Canada, generally
concentrated in lower-income neighbourhoods. “Since the banks have largely
abandoned the lowest income communities in Canada, they have an ethical
obligation to help solve the problem.”

“ACORN Canada is calling on the financial sector to introduce products
that low income people can actually use, like microfinancing,” Soikie
concludes. With such products low and moderate income Canadians would not
be forced into paying the exorbitant interest rates that accompany many
payday loans.

The Statistics Canada report notes that “interest rates and other fees
charged for borrowing $100 for 14 days can range from 335% to 650%—rates
that exceed the criminal interest provisions of the Criminal Code.” It
also highlights the disproportionate use of payday loans by those with low
incomes: “Over half of families who used payday loans were in the lowest
20% of net worth, and nearly 8 in 10 were in the bottom 40%” and that
“choose a payday loan because they live in a community that is underserved
by mainstream financial institutions”.

The Statistics Canada report makes it clear that the lack of lines of
credit available to low income Canadians is a key factor, which pushes
people towards payday loans as their only option. ACORN Canada is calling
on banks to provide microfinancing, so that working families aren't forced
into paying the excessive interest rates that accompany payday loans.


For More Information visit: www.canada.acorn.org

ACORN Canada has released 3 reports on the Payday Lending industry - A
conflict of interest: How Canada's biggest banks support predatory
lending, Regulation of payday lending in Canada, and Protecting Canadians
Interest. The reports are available online at
http://acorn.org/index.php?id=10932.


-- 
Dylan Penner
Policy Director
ACORN Canada
[log in to unmask]
www.canada.acorn.org

180 Metcalfe st, Suite 500
Ottawa, ON, Canada, K2P 1P5
tel) 613.237.1717 x106

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