Chris Bolin Photography Inc.
Manitoba's crackdown on payday loan shops hit another snag when a quick-cash company asked a federal judge to quash new provincial caps on fees and interest rates.
The Edmonton-based Cash Store argues Manitoba's fee cap is "unreasonably low," well below what other provinces allow and so low it will cause irreparable harm to payday lenders.
The Cash Store also argues the federal government didn't consult with lenders, ignored key pieces of information and failed to follow its own procedures when it passed a cabinet order allowing Manitoba to regulate payday loan charges.
The Cash Store is asking the Federal Court for a judicial review of the matter, a move that could again delay new rules meant to protect poor people from predatory loans.
Government spokeswoman Rachel Morgan says they plan to proceed with the new legislation.
She says if there's any change as a result of this case, the government will "deal with it when it comes."
Until now, new payday loan rules appeared to be chugging along after a four-year battle. Earlier this month, the federal government approved Manitoba regulating payday loan rates and the province announced the new cap would kick in Oct. 18.
Manitoba's new rules cap interest and fees at $17 for every $100 loaned - the lowest fees in the country.
To protect people from a spiralling cycle of debt, a loan can only be made for 30 per cent of a person's next paycheque. A host of other regulations protect the poor by ensuring all fees are explained in plain English and lenders can't use rewards or incentives to woo borrowers.
The quick-loan industry balked at the new rules, saying they would put many stores out of business and harm customers who have no other access to emergency credit, except to pawn their goods.
Wayne Helgason, executive director of the Social Planning Council of Winnipeg and one of the poverty activists who have long called for a quick-loan crackdown, said any delay will harm low-income Manitobans.
"The effect will be a continued exploitation of a lot of people who, unfortunately, have few options," Mr. Helgason said. "It's obviously a lucrative business that takes money directly away from those who most need to keep it."