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London makes move to get tough on payday loans

Patrick Maloney

By Patrick Maloney, The London Free Press

Getty images

Getty images

A city councillor is sounding off on payday loan businesses as politicians endorse slightly tougher local rules on the controversial ­financial agencies.

“Payday loans are nothing more than loan sharks masquerading in cute costumes, dancing to jingles,” Coun. Mo Salih said in apparent reference to their TV commercials.

Salih made the comments as council’s community and protection services committee endorsed a pair of relatively small tweaks to the business licensing bylaw to govern payday loan outfits:

• The interest rates and fees charged must be posted inside the shops

• The businesses must offer customers information on ­money management and debt ­counselling.

The proposed changes must be approved by city council.

Politicians also discussed the possibility of using planning regulations to keep payday loan businesses out of certain locations, just as London already does with methadone clinics.

But such a step wouldn’t be retroactive, and could be pointless considering the proliferation of payday loan shops throughout London, particularly downtown.

Attempts to interview officials with the Canadian Payday Loan Association were not successful Wednesday.

But in a 2015 published interview, its then-president, Stan Keyes, defended the organization’s member businesses.

“There are times when a payday loan may be the smartest option,” Keyes was quoted as saying in the Hamilton Spectator. “Payday loans are less expensive than a series of overdrafts or defaulting on an auto loan.

“They are a better deal than ­having the electricity or the heat or the telephone turned off, and as a consequence to later pay to have them turned on again.”

As of Jan. 1, the provincial government clamped down on the fees payday loan agencies can charge clients, dropping it to $18 per $100 borrowed, down from $21. The province touted it as a way to ­“ensure consumers are better ­protected and able to benefit from lower costs for each loan.”

pmaloney@postmedia.com

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