The Nova Scotia Utility and Review Board has cut the maximum cost of short-term payday loans from $31 to $25 per $100 borrowed. The decision, released today, means Nova Scotia continues to allow payday lenders to charge the highest regulated rates in the country. A cost of $25 per $100 borrowed represents an annual rate of more than 650 percent.
Regulated payday loan rates vary widely across the country from $17 per $100 in Manitoba; $21 per $100 in Ontario and $23 per $100 in BC, Alberta and Saskatchewan. So far, the three other Atlantic provinces have not regulated payday loan rates. During its hearings last fall, the Board was told that payday lenders in Newfoundland, PEI and New Brunswick charge up to $25 per $100.
David Roberts, the Halifax lawyer who represented consumers during the hearings, says the decision is an improvement even though it will not reduce maximum rates to the $21 per $100 that he recommended.
"Twenty-five dollars is better than $31, I think that’s clear," Roberts says. "Having said that, we still have the highest regulated cost in the country and I guess we would have liked to have seen the overall cost go lower."
Roberts adds it would be fair to say that the Board does not seem to believe payday loan users are economically disadvantaged and need further protection from high loan rates.
"Our evidence was that a significant proportion of people who took these loans did so because they were economically disadvantaged," he says. "For that reason, it’s important that these vulnerable people be protected as much as possible."
See previous Coast cover story, The poverty machine