Thank you, Mr. Speaker. There is an urgent need for government action on a growing problem plaguing our people, that of payday loan companies’ exorbitant interest rates and hidden charges.
People living paycheque to paycheque and people gripped by substance abuse are among the clients of these firms. Usually small amounts are borrowed for brief terms, but as borrowers learn, added costs are anything but small.
Two court decisions in Yellowknife have proven that when you add up all the fees and charges, the annual cost of a loan can be as much as 1,000 percent. So a $200 loan can end up costing $2,000. The court decisions threw out these loans as illegal and uncollectable. This didn’t happen automatically, though. People with limited means had to go to court to have this loan sharking struck down. How many never even get investigated?
The Criminal Code sets a maximum interest rate of 60 percent of principal per annum. That’s no help when desperate people have to navigate confusing and complicated loan forms with copious amounts of fine print that don’t clearly state the full costs of borrowing. Failure to enforce existing law doesn’t help.
Other jurisdictions have acted to end this victimization, with laws of varying strength. Work is being considered by this Assembly to introduce such law, I hope. We need to expedite this work and ensure that the law is strong.
Four firms have sprung up in Yellowknife in recent years, all conveniently located near liquor stores and bars. It’s obvious that business is good. I say business is too good.
I don’t know what’s happening in other communities. I’m very interested to hear whether there might be similar things happening in Inuvik and other centres.
We have a chance to introduce model legislation that controls profiteering on the needy. I call on the government to move this law forward as a priority and to increase enforcement of existing law. To this end, I will be asking questions of the Minister responsible for consumer protection.
Thank you, Mr. Bromley. The honourable Member for Nunakput, Mr. Jacobson.
