The Canadian Consumer Finance Association is deeply disappointed in the measures set out in the Budget. Our members provide both instalment and short term payday loans to those Canadians who have been refused credit by traditional banks. It is an important and essential service. While it makes a good headline, the effect of the government’s action will not make credit more affordable. Instead it will have the effect of excluding access to credit to those Canadians on the bottom rungs of the credit ladder.

Payday lending is carefully licensed and regulated in each province. The maximum lending rate is set by each province after careful consultation and review by that provincial government. The intrusion by the Federal Government on provincial jurisdiction to set maximum lending rates for payday loans without any research or consultation is bad public policy. It will drive Canadians to illegal unlicensed online lenders who provide loans at higher rates and with no consumer protections.

The Canadian Consumer Finance Association (CCFA) represents the majority of Canada’s regulated providers of small-sum, short-term credit, including payday loans, installment loans, term loans, lines of credit, and cheque cashing services. CCFA member companies operate a total of 870 licensed stores and online businesses across the country.

CCFA works with federal, provincial and municipal governments to achieve regulations that balance consumer protection with maintaining access to safe credit to millions of Canadians who need it.

Our members – licensed payday lenders across Canada – are concerned about the proliferation of online lenders who follow no regulations and put vulnerable Canadians at risk of real financial and privacy violations. As the pool of licensed payday lenders shrinks due to over-regulation, more criminal lenders come online.

Trying to cut down a legal industry, serving a growing number of Canadians in need, doesn’t make sense, especially when no legitimate or safe alternatives are available.

As an actual customer at a licensed Alberta payday loan store said: