Your Alberta Blog

No doubt you have noticed the rapid growth of the payday loan industry in Alberta. I've seen the amount of payday lenders in my neighbourhood explode in recent years - there are three just steps away from my Edmonton constituency office.

A recent count by Service Alberta puts their number at nearly 250 province-wide. I was surprised to learn that, despite common assumptions, payday loan customers range in income levels and social background.

Albertans use payday lenders for a just as wide a range of reasons. There is clearly a demand for this service and consumers need to understand what they are getting into when they sign up for a payday loan. For some people, it can become a vicious cycle of borrowing at high interest rates with little hope of getting out of debt.

I am helping to change that. Very soon, I will be introducing a regulation for the payday loan industry.

To help us come up with the appropriate regulation that provides stringent consumer protection while still being practical for businesses, we began consulting last year. Not only with payday lenders but, perhaps more importantly, the people who use their services. To our knowledge, no other North American jurisdiction has gone to the length of consulting directly with consumers in developing payday loan regulations and I believe our regulation will be stronger because of this.

Protecting consumers will involve much more than setting a maximum interest rate - various fees and insurance premiums can add to the overall cost of borrowing. We are also looking into fees charged to extend consumers a new loan to pay off existing ones, determining whether consumers should have a cooling-off period during which they can cancel the loan with no penalty, and whether payday lenders should be licensed by the provincial government.

Before I bring the regulation forward, I would like to hear your thoughts. The opinions of people like you will help us ensure the regulation is effective in protecting the interests of Alberta's consumers.

UPDATE: On June 3, I announced the details of the Alberta government's new payday loan regulation. It sets a limit on the total cost of borrowing, gives consumers a two day cooling-off period and bans rollovers and discounts. You can read the news release and the report on our consultations online.
- Hon. Heather Klimchuk