Canadian Payday Loan Association Welcomes New Regulation

           (xx) Federal government passes law to allow provinces to
                           regulate industry (xx)

    OTTAWA, April 26 /CNW Telbec/ - The Canadian Payday Loan Association
(CPLA) today applauded the leadership of the Government of Canada, the Liberal
Party and the New Democratic Party for passing a new law that will give
provinces - for the first time ever - the authority to regulate the payday
loan industry.
    For the first time in the approximately 15 years that payday loan outlets
have operated in Canada, Bill C-26 now gives authority to provinces to
regulate the payday loan industry as long as each province introduces
legislation to protect consumers and sets a clear maximum on the cost of
    In anticipation of the passage of this bill, the governments of Manitoba
and Nova Scotia passed their required legislation late last year while the
governments of British Columbia and Saskatchewan have legislation in progress
now. The government of New Brunswick is expected to introduce legislation this
spring with the governments of Alberta, Ontario and other Atlantic provinces
to follow.
    Provincial legislation introduced to-date demonstrates significant
efforts to harmonize regulatory regimes between provinces - likely a result of
the years of consultations that provinces took part in during the lead up to
receiving these new responsibilities.
    "The CPLA has worked for several years to achieve strong regulation that
balances consumer protection with a viable industry," said Stan Keyes,
President of the CPLA. "For the first time, provinces will be given real
authority to regulate the best players in the industry while putting the worst
players out of business. This is great news for consumers and great news for
the serious industry players who are often tarnished by the bad reputations
and bad business practices of some unscrupulous operators in the industry."
    Upwards of 2 million Canadians use payday loans every year. The CPLA
represents 500 of the 1350 stores operating in Canada today.

    Backgrounder on Bill C-26

    What it Does

    Bill C-26 exempts a province from section 347 of the Criminal Code as
long as the province passes legislation that sets out consumer protection
measures vis-à-vis payday loans and sets a maximum rate that payday lenders
are allowed to charge.
    This will be the first time that the payday loan industry will be subject
to specific provincial regulation.


    Section 347 of the Criminal Code of Canada currently prohibits the
charging of interest above 60% per year. Section 347 was introduced in 1980
(15 years before payday lending started in Canada) as a specific measure to
deal with criminal loan sharking in Quebec.
    Bill C-26 exempts provinces from section 347 because it has been
recognized that the application of an annual interest rate on a 5 day loan
doesn't make any sense. It would be like asking a hotel to stop listing their
nightly room rate of $200 and start listing it as an annual rate of $73,000.
Consumers don't stay in a hotel for a year - and they don't have a payday loan
for a year.
    As such, federal and provincial politicians agreed that section 347
didn't make sense for payday loans - indeed, it was never designed to apply to
payday loans.

    What's Next

    Provinces are quickly moving to pass the required legislation and set a
maximum cap on allowable charges. All public comments by provincial
governments have indicated their understanding of the need for the payday loan
product and a viable industry, as well as their desire to put the worst
players in the industry out of business.
    Some provinces will hold public hearings to set the maximum fees while
other provinces will set them at the cabinet table.

    British Columbia introduced legislation in April 2007.
    Alberta is expected to introduce legislation in the fall of 2007.
    Saskatchewan introduced legislation in March 2007.
    Manitoba passed legislation in November 2006.
    Ontario is expected to introduce legislation in early 2008.
    Quebec has never allowed payday lending and is expected to maintain their
    status quo.
    New Brunswick is expected to introduce legislation in the spring of 2007.
    Nova Scotia passed legislation in November 2006.
    Prince Edward Island is expected to introduce legislation in late
    2007 / early 2008.
    Newfoundland is expected to introduce legislation in late 2007 / early

           A Brief History of Regulating the Payday Loan Industry


    1995   First payday loan outlets begin to operate in Canada, growing to
           1,350 stores by 2006.


           The "Consumer Measures Committee" (comprised of representatives
    2000   from the federal government and each provincial government) starts
           a review and consultations on how to regulate the payday loan


           A large majority of the payday loan industry forms the Canadian
           Payday Loan Association with a mandate to work with governments
           towards industry regulation that balances consumer protection with
           a viable industry.

    2004   The CPLA launches a bare-bones Code of Best Business Practices for
           all members to follow.

           The CPLA releases a study by Ernst and Young highlighting the
           costs of providing small-sum, short-term loans.


           The CPLA releases a comprehensive study by Environics dispelling
           many myths about payday loan customers and the reasons why people
           seek out payday loans.

           The CPLA launches a tough new Code of Best Business Practices that
           is quickly recognized by critics and governments as one of the
           toughest voluntary best business guidelines for payday lenders
           anywhere in the world.

           Many original members of the CPLA choose to leave the Association
           because they are not prepared to follow the Code. The CPLA
    2005   highlights to governments that the only way to protect all
           consumers would be to enshrine the principles of the CPLA's code
           in new regulation of the industry.

           Former Liberal Justice Minister Irwin Cotler announces following a
           cabinet meeting that section 347 of the Criminal Code should not
           apply vis-à-vis payday loans and the Liberal Government will
           introduce legislation to give provinces the authority to regulate
           the industry.

           The opposition Conservative and NDP parties concur with the
           principles of changing the Criminal Code and allowing provinces to
           regulate the industry.

           The former Liberal government drafts legislation but calls an
           election one week before it was scheduled to be introduced.


           January - September

           The provinces of British Columbia, Alberta, Saskatchewan,
           Manitoba, New Brunswick and Nova Scotia all indicate their
           interest in regulating the payday loan industry.

    2006   October

           Canada's new Conservative government introduces Bill C-26 in the
           House of Commons


           The House of Commons Industry Committee approves Bill C-26



           The House of Commons approves Bill C-26 and sends it to the Senate


           The Senate Banking, Trade and Commerce Committee hold three days
           of hearings on the bill

           The Senate Banking, Trade and Commerce Committee approve the bill
           and the Senate approves the bill in Third Reading on April 26,

           The CPLA commits to working with each province to ensure strong
           regulations that balance consumer protection with a viable

For further information:

For further information: Stan Keyes, (905) 645-4434

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Canadian Payday Loan Association (CPLA)

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