I thought today I’d talk a little about license compliance, since it’s an element of payday lending that nobody generally talks about. It’s on my mind because as My Canada Payday has just recently become licensed in Nova Scotia, we will naturally be undergoing our first inspection as part of the regulatory process.
While some lenders may not be comfortable with inspections, especially lenders from the days before there was any kind of legislation covering payday lending, we welcome it. It’s an opportunity to ensure that our business practices are correct and that our customers are getting the service that they deserve. Of course it doesn’t hurt that we have never had a problem with an inspection in any province that we are licensed in.
As a consumer, you may want to know how an inspection protects your rights. Since each province is individually responsible for both the establishment and enforcement of payday regulations, the procedure varies. As we are presently licensed only in British Columbia, Ontario, Saskatchewan and Nova Scotia, those are the only areas where I have first hand experience.
In general, however, every province will cover these general categories:
- Are the interest rates being declared in a clear and consistent way?
- Are customers informed about their options for credit counseling?
- Are there statutorily required posters in the lending office visible to the customers?
- Are the rates being charged under the prescribed maximum?
- Are any penalties being charged, and they being applied appropriately?
- Are there any additional fees being charged that are not permitted?
- Is the lender at the address that is on their license?
- Can a customer reasonably get in contact with the lender in the event of a dispute?
- Are loans being given out that exceed 50% of the customer’s net income?
- Are loans being rolled over?
- Are loans being given in parallel?
I’ll get into the details for each province in later posts, but these are the sorts of things that the government is doing to protect consumers in the payday loan marketplace. Hopefully this has been useful, and I hope that some of you leave some comments.