Association members already ensure consumers understand the actual cost of a loan
OTTAWA, July 29 /CNW/ - Members of Canada's payday loan industry association, Canadian Association of Community Financial Service Providers (CACFS) already practice full disclosure of the cost of borrowing to help customers understand what their loan will cost them. In addition, the Association confirmed today that members have been advised to comply with new Ontario regulations that require an additional Annual Percentage Rate (APR) disclosure.
"CACFS members already inform customers about the cost of their payday loans, in compliance with our Code of Best Business Practices. This includes all fees, costs and interest," says CACFS President and CEO Bob Whitelaw. "This new legislation will also now force non-members to finally disclose their cost of borrowing.
"The Ontario Government has asked all lenders in the province to disclose an annual cost of borrowing, even if a loan is taken out for only a few days. While this is like asking hotels to disclose a daily room rate of $200 as an annualized figure of $73,000, we are advising association members to respect the law and disclose accordingly," says Whitelaw.
Most customers want to know how much their specific short-term, small sum loan will cost them. Providing this information on a complicated annualized basis will not help them make a more informed decision on a loan they will have for only several days. Therefore, CACFS members will continue to prominently display the exact cost of fees and interest on loan agreements, as well as in the required APR format.
A recent survey by Environics Research Group shows payday loan customers are more aware of what they actually pay to payday lenders than what they pay in either bank or credit card fees every month.
"Our members have always believed the best way to protect consumers is to fully regulate the payday loan industry -- something we are strongly urging both the provincial and federal governments to do," said Whitelaw. "We already fully disclose the cost of borrowing. Let's go all the way and regulate payday lenders to protect consumers and allow for a viable industry that is serving more than 1 million Canadians."
CACFS members comply with a rigorous Code of Best Business Practices that includes limiting NSF fees, prominently displaying the cost of borrowing, not allowing roll-overs on loans and encouraging credit counselling for customers that have trouble paying back loans.
CACFS wants government to shut down operators who do not have consumers' interests at heart and will continue to meet with both federal and provincial government officials to share proposals and urge swift action on regulation of the industry.
About CACFS
The Canadian Association of Community Financial Service Providers is a national association of payday loan providers that offer small-sum unsecured short-term credit and operate retail outlets across Canada.
/For further information: Sophie Lambert, TRILLIUM Corporate Communications Inc., (416) 322-3030 ext. 227, sophie(at)trilliumpr.com/
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