Bill C-26 (Historical)

An Act to amend the Criminal Code (criminal interest rate)

This enactment amends the Criminal Code by exempting persons from the application of section 347 of that Act in respect of agreements for small, short-term loans. The exemption applies to persons who are licensed or otherwise authorized to enter into such agreements by designated provinces that have legislative measures that protect recipients of payday loans and that specify a limit on the total cost of those loans.

Criminal Code

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, payday lenders and other financial institutions have risen up in a community like Winnipeg North to fill the gap. This is an area that is not regulated. Consumers are left in a very vulnerable position, without regulations, without accountability, and many in fact are being ripped off.

I am not here to suggest that all payday lenders are bad, are vultures, or are trying to take advantage of ordinary folks, but I am saying that there are some. It is an area that has to be regulated, given the numbers in the field today, and given the fact that so many people rely on them.

I do not need to go into the horror stories, members know them. We know about individuals paying something like 1,000% or more interest for a short term loan, getting into a cycle of indebtedness and not being able to get out of it, and losing their homes and not being able to provide for themselves and their families.

So, it is an issue that has to be dealt with. The only way that we can deal with it is to set aside the Criminal Code, so that provinces like Manitoba, which has a very sophisticated regulatory scheme, are able to exercise their powers and provide some governance in an area that has been largely neglected. That is what this bill simply sets out to do. It sets aside the Criminal Code for those provinces that have demonstrated they have a regulatory scheme ready to kick in and deal with the problems at hand.

It is not something that takes away powers from the provinces. It does not give new powers to the federal government. It does not touch this whole issue of federal-provincial relations. It is not an issue for Quebec because it has put in place its own regulatory provisions around lowering the criminal rate of interest from 50% to 35%. That means it is dealing with this issue in its own way.

We are saying that the rest of the country needs to have a mechanism for doing so. It is impossible under the current provisions. So, we look forward to supporting this bill on an urgent basis and getting it up and running, so that Canadians have some protection in this important area of payday lending and other financial institutions.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I listened to my colleague with great interest. There are payday lenders In several communities in my constituency. They provide a greater access when banking hours are sometimes restrictive and when people can not otherwise get their cheques cashed. I can just imagine the horror of having a paycheque in one's hand, having a young family to feed, but not having access to the bank to deposit the cheque or not having a debit card.

However, I am also concerned. When people are in a vulnerable situation like that, they can be taken advantage of, and that is an unfortunate thing. I really appreciate hearing the hon. member say that she and her party fully intend to support these changes. I am glad for that.

Could she elaborate on some of the clauses in Bill C-25, which I just spoke to a few minutes earlier? One area that is of particular concern to me is the ability of payday lenders to rollover, which means that if there is a loan that is not paid back in time, the payday lending organization, because it is unregulated, may charge a second set of fees over and above the additional interest rate. We know the interest rate charged on these is fairly minimal. It is the fees and everything that gets added onto these payday loans that make them quite expensive.

Would she support legislation that would take care of this rollover problem in her province?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, first, the Conservative member makes an important point about the use of these payday lenders on a more frequent basis, not simply because banks have up and left the town, but because sometimes the hours, terms and conditions for doing banking are not conducive for ready access. In fact in parts of Winnipeg many individuals cannot access a bank because they do not have the right ID or cannot fit into the schedule of the bank.

The member is right. There are other reasons why payday lenders have grown in this period of time and why we need to have regulations in place.

With respect to the question of provincial legislation, I think the Manitoba bill provides a model for the country. I know six other provinces are looking at this as a model. It is a bill that prohibits rollovers. This is the first important principle that is enunciated in Bill C-25, introduced by the finance minister, Greg Selinger.

It also ensures that payday loan companies must operate within a comprehensive regulatory framework. It does this by amending the Consumer Protection Act and by working through the Public Utilities Board as a regulatory body to ensure that all rates are set according to a set of principles in an open, upfront basis, with a publicly administered board, so there can be no questions about how the rates are applied and what penalties are at play.

I could go on at length, but I would recommend Bill C-25 as a blueprint for going forward. The Manitoba government is ready to have it proceed to the final stages in the Manitoba legislature, as soon as there is some guarantee from this place that the Criminal Code provisions have been set aside so the regulatory framework can get up and running.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, the member has talked about Manitoba and the ability of moving forward with its consumer protection act.

What we really have is a payday lending institution that is just completely unregulated. We have certainly heard from members here today about the difficulties this can create. I certainly agree with my hon. colleague on some of the issues that we face, not only in the major centres but in smaller communities too, where the lack of access to banking and banking facilities becomes a bit difficult.

Has the member thought at all about what happens if provinces or territories choose not to regulate? Does the member have any ideas of how that would pan out with one province moving forward with regulations and, for example, the neighbouring province not?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, the issue of payday lenders is a problem in all communities across the country, whether they are urban communities or rural communities. I appreciate the perspective that the member has brought to this debate.

I believe that once this legislation is up and running, it will not be very long before all provinces are onboard. In addition to Manitoba, B.C., Alberta, Saskatchewan, Nova Scotia and New Brunswick have expressed an interest in regulating payday lenders. We are over halfway there. If other provinces see what a plus it is to move in this direction, they will soon be onboard.

However, the member has identified a problem which we will have to address when the bill goes to committee. We will have to ensure that there is no way operators can move shop to a province and cause some people to be vulnerable in one part of the country and not another and to cause a lack of national approach overall. It is a good point and it is an issue with which we have to deal. It can be dealt with in the framework of this legislation.

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I thank the member for sharing her time with me.

I rise to support this legislation. If there were some way that my words would make it go faster or expedite it, I would happy to use whatever words those would be. I think it will move quickly because everyone understands what this means to the people in their communities. Even as we stand here today talking about it, there are people who are losing their homes and assets because they have found themselves in this irreversible cycle of interaction with payday loan companies and they cannot get out of it.

We perhaps would not necessarily expect, particularly in these economic times, many people to be in the situation where if they had an emergency before their next paycheque, they would not be able to manage it. This is not about people who fit a model where people understand why those people go to a payday loan company. Many people live from paycheque to paycheque. It could be a dental emergency for a child, or expensive medication, or a repair to a house, which they did not expect, and all of sudden they are stuck.

No one says there should not be payday loan companies. As the member has said, as did other members, I know there are times when those companies can provide assistance to people who otherwise cannot get it. However, if they are already in difficulty, they do not need assistance to become bankrupt. They do not need to lose all those things they were trying to keep because of that one financial outlay and the truly criminal rates that many payday loan companies charge.

We have many payday loan companies in the community in which I live. I am sure some are operating honourably. I have had payday loan companies say to me that they want to have regulations. They know the reputation of other kinds of payday loan companies is spilling over on to everyone.

This legislation shows that we can look at something and find a way, if we wish to, to respond to these issues without a big broad sweeping brush. As the member who spoke before me said, Manitoba is ready to bring in legislation. Quebec already has legislation and other provinces are looking at it, although as I look at these provinces, some may be looking at it more closely than others. I am not sure, but they are certainly working on legislation.

I think it shows that we can find a way, that this is not the heavy hand of the federal government saying to the provinces that it does not care what good things they have done, that those things are gone and that it will now go in and tell them. We recognize the good work the provinces have done. We also recognize that we cannot exploit the most vulnerable people.

The research and polling I have seen says that there certainly is a percentage of people who use a payday loan company once or twice in an emergency and do not go back, so they are fine. However, some people get caught in that cycle because of the interest rate, and they will never, ever be able to get out of it until they have lost all of their assets. We see people across this country who are in that situation.

I would like to believe that voluntary regulation works in anything, but my experience is that voluntary regulation does not work in very much. I know that the payday loan companies have introduced a set of voluntary guidelines, but we still see the abuse going on. No matter what the issue, I have yet to see voluntary guidelines that have been picked up by everybody. We have to provide a better solution for people in Canada, better than having the good people following voluntary regulations while the others do not.

We could recognize Manitoba's regulations or Quebec's, but having this piece of legislation in place across the country means that we would not have hundreds of companies suddenly packing up and moving to the province where they can make the most money because there is no regulation there. That is the last thing we want.

We have seen this with other businesses. They just move to where they can make the most money with the least restrictions. We cannot have that either, because it means that people in one province become even more vulnerable than other people have been across the country. This legislation ensures that companies are not able to do this. We have had court cases brought before the court by individuals or groups of customers, but they still do not provide safety for everyone in Canada.

The other issue this raises for me is that there are several places in Canada that do not have banking services. Some have been mentioned. Some are very small communities where the banks have closed up and moved out of Dodge, but there are also very poor urban areas where banking facilities are not available. In the downtown east side of Vancouver, with one exception brought in by some colleagues, there was no place for people to bank. People cashed their cheques somehow. They carried the money around and were very much at risk. There was no kind of banking service available. While I agree that it is primarily in small communities that banks leave, there are very poor parts of urban areas where banks do not exist and people do not have the services or the resources.

Nor do many people have information about payday loan companies, so the companies do not get caught. I do not know if any of their rates can be called reasonable, but if they know what a reasonable or a more common rate would be, they do not get caught. But when we go to a payday loan company because we have an emergency, we are desperate. Most people do not do this because they choose to. They do it because they are desperate. People do not have time to sit back, research, read some pamphlets or talk to someone about it. They use payday loan companies because they have an emergency situation. They are very vulnerable.

One point raised in a question from a colleague from the Conservative Party was about what would happen if a province chooses not to be involved. I think there are some issues that people can work out at committee, but given the circumstances in which people live in the country, given the incredible exploitation, given that people have lost their homes and do not have a place to live or resources for their children, I would hope that the bill would proceed expediently through committee so that Canadians will be protected as soon as possible.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I listened carefully to the presentation by the hon. member from the NDP and the presentation by her colleague a little earlier.

They understand that Quebec already has legislation that protects against usurious loans, which is very good. Nonetheless, the bill also has conditions for every province wanting to be exempt from section 347. The federal big brother will impose its conditions on provinces wanting to be exempt from the application of the legislation. This is yet another encroachment by the federal government into provincial jurisdiction, which clearly states that the framework of commercial practices is a provincial responsibility.

The problem is that this becomes a bad habit of the federal government, even though Quebec can be exempt from the application of the legislation. The idea is that if Canadian unity is to be maintained, the jurisdictions of each entity must be respected. It is through such respect that Canadian unity should be achieved and not by continuing to interfere in provincial jurisdictions.

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I heard a statement. I am not sure I heard a question. I think people have recognized that Quebec has its own legislation and it does work. I do not believe that this is an attempt to override the legislation being brought forth by Manitoba or the legislation of Quebec. If the member believes that to be the case, then I would hope that those questions could be raised and debated at committee. I do not see this as an attempt to override the legislation that Quebec already has in place.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Mr. Speaker, I listened with interest to some of the observations of the New Democrat members, especially the member from Winnipeg, about the bank hours, and probably the hours of the credit unions too. She talked about that creating problems of accessibility for a lot of people who then become trapped into dealing with these groups that are on the outside or the periphery of the issue of banking and availability of financial services.

I am curious. There is some speculation that Wal-Mart may be moving into Canada and providing banking services through its outlets. Knowing Wal-Mart's hours, those stores would likely be open as many hours as they can, seven days a week and in the evenings and so on. I think the Wal-Mart corporate philosophy is to increase the standard of living for people by reducing the cost of living to people. Arguably, Wal-Mart does that.

I know this is perhaps only a bit germane to the discussion about the legislation, but what are the member's views about Wal-Mart moving into this area? Would Wal-Mart be part of the solution to reducing some of the problems and some of the vulnerability of low income people who cannot access banks and credit unions? Might this be a positive?

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, I must say that I would need to have a very careful look at what Wal-Mart would intend to do in terms of bringing banking within their scope of business.

The member is correct when he says that Wal-Mart has extended hours, but Wal-Marts are not likely to find themselves in the same areas as those places that are under-serviced, such as the downtown east side of Vancouver or small rural areas that do need extended banking hours and are not likely to be within driving distance, walking distance or bus distance, if there is a bus, of a large anchor store such as Wal-Mart.

I do support anything within reason that would bring extended hours to people. Maybe there is a message for another kind of banking as well. The bank that eventually developed in the downtown east side of Vancouver offered a great deal more flexibility to its members than regular banking hours do. It recognized that the people who used that bank either did not work regular hours or did not have regular hours and were able to come in at times that other people could not. I think there would be an interest in anything that would provide more flexibility for banking. I must admit that I would want to see more carefully what Wal-Mart would intend to do with its banking, but we do see this within Safeway.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I would like to ask the member for her observations on a few points.

Despite the Criminal Code of Canada making loans with excess interest rates illegal, and given that there have been so few prosecutions in the area such that this law has become necessary to fill the gap, why does my colleague think there was such a paucity of prosecutions? What could we have done about this? What should we do about it? As she knows, there is a limit to this payday loan exception.

Why are 850 of 1,300 payday loan sites supporting the bill? Does it make the member a little nervous? Is it perhaps it is a bit like the wolf setting the terms for the sheepdog's tenure on the sheep pasture?

[Penny Priddy, NDP, Surrey North, BC]

Mr. Speaker, one of the reasons why we have seen a very small number of cases go forward is that we have to look at the people who have been exploited. These are not people who are likely to get a class action suit together and take it to court. These are people who do not have the resources to do that. They may not have the knowledge about how to do that. Almost unanimously, the most vulnerable people are not the people who are going to take a court case forward.

Am I worried about the people who want regulations? No, I am not. I will be watching very carefully, though, to make sure that those regulations are followed. I will take them at their word that they want those regulations and that they will follow them.

[The Deputy Speaker, Bill Blaikie]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, Bill Blaikie]

The question is on the motion. Is it the pleasure of the House to adopt the motion?