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Ontario wants to cancel payday loan license of companies

CBC news has discovered that the Ontario government will attempt to cancel the license of the Cash Store Financial Services, one of the main payday advance stores in Canada. The Ministry of Consumer Services in Ontario claims that the company broke Payday Loans Act of Ontario, which restricts the cost that can be claimed by the payday loan companies.Cash Store Financial Services has two hundred outlets in the Ontario alone: named as The Cash Store and InstaLoans. The Ministry of Consumer Affairs in Ontario claims that the Cash Store Financial Services violated Payday Loans Act of Ontario, which restricts the charges that payday loan companies can quote. They work for through nineteen different communities in Ontario. The Ministry of Consumer Services claims that the company is responsible of “numerous violation” the payday loan act. It says that Cash Store has charged consumers fee that is more than the maximum allowed amount which is not above $21 for each $100 borrowed or charged banned fees. Anybody who opted for payday loans at their stores in Ontario was needed to accept the cash on cash or debut cards and not as cash advance. The cash store illegally charged extra fee up to 18 dollars to activate the cash card and eight dollars per month to keep the card active and 10 dollars to reload it in addition to the $21 fees charged on every $100.
Ontario wants to cancel payday loan license of companies

Ontario wants to cancel payday loan license of companies

The ministry of consumer services is asking a local tribunal to retract the license of the company.

Company looking for a hearing

Cash Store Financial Services gave a statement demanding a trial into this matter. The company also claims that it has altered its ways to do business in Ontario and confirms that it no longer provides payday loans in Ontario so any way to annul the payday services would not interrupt its operations. The company confirms that the government has attempted to force it to give payday loans in cash instead of delivering debit cards and has attempted to stop it from selling products other than payday loans. Cash Store’s executive at the head office in Edmonton did not return the calls from CBC News looking for their comment. Government is calling this a “major consumer protection enforcement action” and says that it will discharge more details on Wednesday.
Incoming Premier Kathleen Wynne reported on Wednesday that the Liberals enacted the Payday Loans Act to prevent the companies from cheating consumers.
She said in a conference that “There were susceptibilities for people who were utilizing payday loan services, and we wish to ensure that they are protected”, but she refused to remark on this particular case.

NDP MPP says, more regulation needed

The Ontario province enacted the Payday Loans Act in year 2008 that was particularly created to prevent the payday lending companies from charging hidden fees or exorbitant charges when giving out money to the working poor. Among the listed payday regulations in the act – restriction on the total cost of borrowing is a maximum $21 on each $100 borrowed. But NDP MPP Cheri Di Novo reports that this rate of interest is excessive, and that charging $21 for a 2 week period of pay day loan actually adds to 300-400 percent of interest when calculated annually, similar to loans like a mortgage. She also says that the local government is required to take further action to protect the consumers, and that the present act cannot work in the long run. Di Novo in year 2007 tried to pass a private member’s bill to fix the rate of interest at 35%, but was unsuccessful. He further added that most Ontarians are charging over 35% interest rate in this date and age where interest rates are about 1-3% range; is that logical? It is only reasonable in terms of earning profit and most of the banks would be jumping out of joy if they could charge the similar rate of interest.

Loan contract comes with layers of fees

Apart from the fee cap, there isn’t a maximum interest rate that these companies can charge as per the Ministry of the consumer services. One of the payday loan users identified as Joe commented that these financial dealings were a scam. But he admitted that he and his wife had no choice but choose to borrow them. He borrowed a payday advance of $500 from a cash store, a loan that demands him t repay $650 with interest. He also told the CBC channel that he is charged an interest rate of $17 in addition to other fees and charges. The loan agreement comes with several layers of fees in a dine print. These companies are taking advantage of people like us who don’t have many options, he added further. The payday loan companies are running their business at the helplessness of people who are in need of money and have no other option to suffice their requirements but to opt for loans with such high rates of interest.