Report outlines options for regulating payday lenders
March 21, 2022 9:00 a.m.
Should the City of Windsor regulate payday loan companies?
They fill a gap in the financial sector by offering short-term loans but at a high interest rate. Most of the clientele are low income, unable to get a bank loan or get help from friends or family.
There are 17 in the city now, with the greatest concentration downtown with five separate establishments.
While they can help get that live paycheck through a tough time, research also indicates that they can lead to a cycle of financial deterioration. A Government of Canada survey of payday loan users found that 74% considered it the best option available to them.
Some municipalities in Ontario regulate them. Kingston and Hamilton limit payday lenders to one per neighborhood to reduce their number in low-income neighborhoods. Branford only allows ten and limits how close they can be to correctional group homes, group homes, shelters, medical clinics, schools and gaming facilities.
If councilors choose to regulate payday lenders in the city, a report presented to council offers three options.
Like Brantford, Windsor could limit the number of people who can operate in the city, while retaining grandfathering in existing businesses. It could also limit the number in each neighborhood.
A targeted approach would limit their location near casinos, detox and treatment centers and areas where vulnerable populations live. It could also offer a hybrid of the two.
The city could also license payday lenders.
The report makes no recommendations and was prompted by a question in 2019 from Ward 3 Councilor Rino Bortolin.