John Cotter, THE CANADIAN PRESS
Wednesday April 2nd, 2008

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EDMONTON - Alberta is quietly looking at whether it should regulate the payday loan industry, but with the deadline for submissions only weeks away, some agencies that deal with the working poor were not even aware of the review.

Without issuing a news release, the government posted its discussion paper proposal to regulate the industry March 17 on a the Service Alberta Department website.

The province has invited specific payday loan organizations and other groups to make submissions by April 21.

"We want to make sure that consumers get protected from the predatory practices of some lenders and are well educated about what the outcome of a short-term loan will be," Service Alberta spokesman Eoin Kenny said Wednesday.

Individual Albertans or other groups that have not been directly contacted by the government can also make submissions or fill out an Internet questionnaire.

The payday loan industry is coming under increasing scrutiny because of abusive lending practices in some provinces that have included charging interest rates higher than 800 per cent per year. Anti-poverty groups have accused the industry of praying on transients and people who live in low-income neighbourhoods.

Quebec, British Columbia, Manitoba, Nova Scotia and Saskatchewan have all passed payday loan-lending laws while Ontario and New Brunswick have introduced such legislation. The federal government gave provinces the authority to set their own rates for the payday industry in May, 2007.

Alberta, where about 170 payday loans stores are operating, says it is considering three proposals:

-Maintain the status quo and only prosecute lenders who charge high interest rates under the Criminal Code, something the province maintains would be "complex, unwieldy and costly."

-Regulate the industry through federal law under Alberta's Fair Trading Act that would require companies to be licensed and set a limit on fees and interest.

-Alberta could introduce its own payday loan legislation.

The Alberta discussion paper says the government must weigh the question of whether the industry fulfils a need for people who can't get loans through banks and other financial institutions with the fees they charge for the service.

Stan Keyes of the Canadian Payday Loan Association said he has been invited by the province to make submissions to the review on behalf of its members in Alberta that include: Calgary's Cash Depot, Canada Cash Group, EZ Cash Advance, Money Mart, Quickloans Financial Services, Speedy Cash Payday Advances and Western Cash Mart.

Another firm called Rentcash Inc. has also been invited to make a submission.

Keyes said the association would like Alberta to regulate the industry but allow stores to charge maximum interest, fees and regulatory expenses of $23.89 on every $100 lent per payday period.

He warned that if the rules are made too strict it could drive companies out of the business and leave people who need short-term loans with few options.

"People would have to choose to unplug their TV set and take it to a pawn shop or borrow money from unsavoury lenders," Keyes said from Hamilton, Ont.

The association says loans are capped at $1,500, with the average loan being $300 for 10 days.

Following the April 21 deadline Service Alberta staff will compile a report with recommendations for Minister Heather Klimchuk.

A department official said the submissions, the report and its recommendations may not be made public. There is no deadline for making a decision.

Groups that advocate for and help the working poor, including the Edmonton Social Planning Council, Calgary Drop-In Centre, Catholic Social Services and other organizations, said they were not aware of the Alberta government's review or invited to make submissions.

Dermot Baldwin of the Calgary Drop-In Centre accused the Alberta government of being underhanded and wondered why the province didn't better publicize the review to ensure it would get wide-ranging input.

"It sounds like it is a set-up from the start," said Baldwin, who runs a facility that helps up to 1,100 homeless and working poor people per day in Calgary. He said now that he is aware of the review the centre will make a submission before the deadline.

"This affects vulnerable people. I know people who have borrowed like $500 and in the space of three months, after paying back weekly charges, owe $3,000. It is enslavement of these people at the lower end of the financial spectrum."

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