Sudbury city councillor advocating for restrictions to payday loan companies

Payday loan companies are a common sight in Sudbury, particularly in the downtown, but a city councillor wants to see restrictions in place on what he says can be "predatory" businesses.

Geoff McCausland, who represents Ward 4, will put forward a motion at city council Tuesday evening, asking staff to look into options for restricting payday loan companies, and report back to council.

"I think everybody understands that these places are problematic," McCausland said.

Provincial regulations allow municipalities the power to regulate the locations of payday loan stores. McCausland says restrictions could potentially include limiting the total number of establishments permitted in the city, requiring they be a certain distance apart, or not allowing them near certain locations, such as casinos, methadone clinics or affordable housing units, for example.

The "most extreme" option, he said, would be to follow the lead of Toronto which, in 2019, stopped issuing any new payday loan licences.

Concerns from constituents

McCauslandsays he's had concerns about payday loan companies for some time, and has heard a number of concerns from constituents. After providing notice of his motion to council, he says even more stories from constituents "flooded in."

"People saying my brother, my parent, my friend, they got in that vicious cycle of borrowing, and were takenadvantage of, and encouraged to do so by certain payday loan establishments," McCausland said.

"It's really quite unfortunate and devastating."

McCausland says not only do payday loan companies provide "very expensive" debt, the problem is often worsened when there are multiple companies in one area, and people are in difficult financial circumstances.

"There's a rule that you can't take two loans in one two-week period, but that does not stop people from going from one to the next to the next to the next and borrowing their max at each of the places and digging a hole they may never get out of. And that is the biggest problem," McCausland said.

He says requiring that the establishments be a certain distance apart would make the "most destructive form of borrowing" less convenient, and less likely.

'Best option' for some, says association

CBC News contacted several payday loan companies in Sudbury, asking for comment on McCausland's motion. CBC received a written statement from the Canadian Consumer Finance Association, which represents most payday loan companies.

The association says for many people, "a payday loan is the only source of credit available to them during their time of need."

The association cited a 2016 survey of payday loan borrowers by the Financial Consumer Agency of Canada, which found that 86 per cent of survey respondents said they borrowed money for necessary expenses such as utility bills and car repairs, with more than half of those saying the expenses were unexpected.

"For a single mother who has an unexpected shortfall of income and needs a loan to buy groceries, or a senior who needs to borrow to pay for medication before receiving their pension cheque, a payday loan may be their best option," the association said.

McCausland said his proposal to put restrictions in place is not a full solution, "it is what we can do to help address the problem." He said a "real solution" would involve higher levels of government requiring banks to lend money to "all members of society" at reasonable rates.