Dave Flaherty/The Oshawa Express
Following in the footsteps of Toronto, city staff could soon be looking for ways to block more “payday loan” businesses from coming to Oshawa.
At its latest meeting, the city’s corporate services committee directed staff to review licensing policies for businesses that provide loans to customers in need of quick money.
Earlier this month, Toronto city council voted to no longer provide licenses to payday loan outlets.
Ward 1 city and regional councillor John Neal, who introduced the motion, said he has been trying to address the issue for some time now.
“I’ve been looking at this for a number of years,” Neal said.
Neal said these establishments are “hurting low-income people, by no fault of their own.”
“I have very, very little love for these establishments,” he adds.
Ward 4 city councillor Derek Giberson estimated there are about 10 loan businesses in his ward alone.
“They take advantage of people whenever they have the fewest options and are in dire straits financially. I hope there is something we can do as a municipality to somehow reign these businesses in or make them more responsible,” Giberson says.
Ward 5 city and regional councillor Brian Nicholson says he wishes the province would ban payday loan businesses outright.
He believes some customers are those who are receiving social assistance.
“It’s taking advantage of the very limited funds that people are getting now, it’s really just taking advantage of and victimizing people,” he states.
However, he wonders if the city even has the legal authority to stop giving out licenses to these businesses.
“Toronto may have rights we don’t have under the Municipal Act,” Nicholson says.
If this turns out to be correct, he suggested the city appeal to the provincial government to “get that power.”
According to the federal government’s website, the costs of paying a payday loan are much higher than credit cards, lines of credit or overdraft protection on a bank account.
Assuming a customer takes out a $300 loan for 14 days, the website states they would pay $51 in interest and other charges, in comparison to $5.92 for a line of credit, $7.42 for overdraft protection, and $7.65 for a cash advance on a credit card.
Mayor Dan Carter said the issue of people getting into trouble because they take on high-interest loans ties into other issues low-income residents face.
He said higher levels of government must act.
“We need the province to stand up not only on this issue, but on poverty in general,” Carter says.
Ward 2 city councillor Jane Hurst said it is “distressing to see people being taken advantage of when there is no other option.”
However, she notes it is not only low-income earners that use payday loans.
“It’s people with gainful employment using these services. Everybody wants money now,” she says.
Hurst said she notices a lot of these businesses take over former branches of established banks.
“Banks retreating from south Oshawa hasn’t helped,” Neal adds.
The city’s commissioner of corporate services Tracey Adams told The Oshawa Express staff are unsure exactly how many payday outlets there are in Oshawa.
The Express reached out to Brian Dijkema, vice-president of external affairs for the non-partisan think thank Cardus.
Earlier this year, Cardus released a report, written by Dijkema, on the status of the payday loan industry in Canada.
After Toronto council decided to stop giving licenses, Dijkema told CBC in early-October the move could have “major downsides.”
He said it could create a monopoly for the larger payday loan companies, and it also takes away an option from lower-income residents who don’t have the same credit options as higher earners.