Payday displayPeter Power/The Globe and Mail
The Ontario government is expected to announce that a limit on the amount that payday lenders can charge will come into effect Tuesday.
That would be welcome news to the Canadian Payday Loan Association, which represents more than 20 lenders such as Money Mart, but it could force some of the smaller players out of business, suggested association president Stan Keyes.
Ontario, like the majority of provinces, has decided to establish legislation that places new rules on payday lenders. A rule requiring the lenders to be licensed has already come into force in the province. A rule that sets a maximum of $21 in charges per $100 borrowed was announced in the spring, but has not yet come into force.
"From our last count, since the licensing came into effect April 1 and the consumer protection measures came in July 1, with the industry knowing that there was going to be a $21 cap on fees coming along, thus far about 29 payday loan companies have closed their doors," Mr. Keyes said in an interview Monday.
If the rate comes into force this week, more lenders might shut down, he said.
A spokesman for Ontario's minister of consumer services confirmed Monday that the maximum charges will come into effect on Tuesday.
Mr. Keyes said the industry is supportive of the regulations.
"In an unregulated industry, you had these companies who were taking advantage of customers and charging ridiculously high fees," he said.