Look Back At The Payday Loan Industry Regulations In 2010

2010 was quite an eventful year for the payday loan industry in Canada

. As many as six Provinces across the country now have regulations in place which Govern payday lenders. While the new rules and regulations are welcomed by the industry, there have been some reservations as well with many payday stores shutting shop especially in Manitoba. Of course with or without the regulations, payday loans continue to be one of the vital tools used by families all over Canada to manage their monthly finances.

The first major development in the payday loan industry in 2010 was the approval of new payday loan regulations in the Province of Saskatchewan. According to the new rules, payday lenders in the Province are prohibited from charging anything over and above the permissible interest rate. They are also not allowed to charge any prepayment fees and are not allowed to lend more than 50 per cent of the borrowers next paycheck. Apart from this, all payday lenders will now have to be licensed in the Province and provide their customers with written agreements of the loan.

After Saskatchewan, it was the turn of Manitoba to approve new rules and regulations for the payday loan industry. With the introduction of the new regulations, Manitoba became the most stringent Province for payday lenders. As per the regulations passed in Manitoba, payday lenders are now allowed to charge more than 17 per cent for a payday loan which is by far the lowest in the country. Apart from this, they are also not allowed to lend more than 30 per cent of the borrowers next pay check. Similar to other Provinces including Saskatchewan, payday lenders as well as the brokers would need a license to operate.

The new regulations were seen as a victory for consumer protection forums who have been asking for tougher norms for many years now. Of course while many payday loan stores had to shut shop in the country in 2010 due to the new rules, by and large the industry was happy with the regulations. It helped the legitimate lenders make a case for themselves as a genuine alternative to conventional loans. The popularity of payday loans has continued to grow in 2010 not just in Canada but all around the world. More than a million people are expected to use payday loans in the New Year in Canada alone. The most important change in the industry was the change in outlook towards payday loans. Apart from people with bad credit, even those individuals who have a good credit history have been opting for payday loans over conventional loans in the market.

by: Martin Lander

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