Ottawa moves to curb spread of payday loan outlets

Posted
April 12, 2018

Ottawa is a step closer toward controlling the concentration of payday loan outlets in some of the city's lowest-income neighbourhoods, and limiting the spread of the high-interest moneylenders.

On Wednesday city council readily approved Mayor Jim Watson's motion directing staff to come up with a new set of rules governing payday loan outlets, which he said "prey on the poor and the vulnerable."

The businesses are not considered banks and can therefore charge extremely high interest rates. The outlets are concentrated along Montreal Road in Vanier and Bank Street in Centretown.

No say over existing outlets

The province recently changed the Ontario Municipal Act to allow cities to limit the number of payday loan outlets.

Before they can do that, municipalities including Ottawa must alter their zoning rules and consult with the public, especially segments of the population that would be most directly affected by the restrictions.

City staff will look at capping the overall number of outlets, as well as setting a minimum distance between them. Staff will bring recommendations back to council in early 2019.

Staff will also look at whether the city should consider licensing payday loan outlets, making it more costly for the businesses to operate, a move being considered in Toronto.

But even if and when new restrictions come into force, it could be years before their effect is felt. That's because the city has no power to close existing outlets, and there's nothing to stop new ones from setting up shop before the rules change.

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