Barrie’s payday loan establishments will be attracting the type of interest they can do without.
City council passed a motion Monday night that staff investigate the feasibility of licensing payday loan establishments under the general business licensing bylaw to restrict their number and concentration throughout Barrie.
And as part of the zoning-bylaw review, staff will also look at the current minimum separation distance provisions for the uses of tattoo parlours, body-piercing parlours, pawn shops and payday loan establishments.
City staff would then report back on both requests.
Coun. Keenan Aylwin, who represents the downtown where many payday loan establishments have operated, said other cities have shown Barrie what can be done.
“I’m hoping that we can restrict the number and concentration of these predatory payday loan establishments in the city, as other municipalities have done,” he said. “For example, the City of Guelph recently voted to restrict the number of these establishments to one per ward.
“This could help to protect residents and our neighbourhoods from being taken advantage of by their exorbitant interest rates,” Aylwin added. “This is about building strong neighbourhoods and supporting people who need it most.”
Coun. Clare Riepma said he’s interested to see what recommendations city staff will have after studying the question further.
“While new regulations would not affect the existing payday loan operations, I think that a licensing system together with a suitable separation distance would help to reduce the impact of these uses,” he said.
“I recognize that there are people who depend on these services. Usually these people are the more economically vulnerable,” Riepma added. “I would prefer that the major banks offer the services that payday loans offer, but on more reasonable terms.”
Phillip Wilkins, of Barrie, has been in the financial services industry for more than 20 years, the last 11 with a non-profit credit counselling niche, and also as a certified educator. He said he applauds any discussion and movement to eliminate payday lenders.
“We at least need to severely limit them,” he said. “Whether I am counselling or educating, payday loans are about 80 to 90 per cent of the issue we have to address, as well as numerous questions during our financial presentations.
“The actual cost of an average payday loan can be expressed in terms of an interest rate in excess of 400 per cent,” Wilkins added. “And yes, the more financially vulnerable are most often the collateral damage.”
The province granted municipalities the power to restrict payday loan establishments in 2018. Barrie’s zoning bylaw already has provisions for minimum separation distance of 100 metres for payday loan establishments in the downtown.
The Financial Consumer Agency of Canada, an arm of the federal government, defines a payday loan as a short-term loan with high fees that make it a very expensive way to borrow money. As much as $1,500 can be borrowed, but must be paid the loan back from the borrower’s next paycheque, the agency says. Borrowers have as many as 62 days to pay it back in Ontario, Manitoba, New Brunswick, Alberta, and British Columbia.
Payday loans are meant to cover a cash shortfall until the borrower’s next pay or for a short period, the agency says. These loans should be avoided for ongoing costs such as rent, groceries or utility bills. Privately owned companies offer payday loans in stores and online.