October 7th, 2015 Alberta Liberal Leader David Swann released his recommendations to the government on strengthening payday loan regulations in Alberta.
“Alberta’s current payday loan fee cap of $23 per $100 borrowed … translates into an annualized interest rate of 600 per cent,” wrote Swann.
Swann’s letter to Service Alberta Minister Deron Bilous recommends establishing an annual interest rate cap of 35 per cent, noting this will discourage payday loan operators. Swann expressed his support for a pilot project between First Calgary Financial and Momentum Community Economic Development, which is offering a 12 per cent annualized interest rate short term loan to borrowers and suggests that the government consider getting ATB Financial to fill the resulting void in short term lending opportunities.
Failing this approach Swann recommends tougher restrictions on fees and interest rates.
Swann also recommended a centralized payday loan tracking system that could allow more tailored services to borrowers, requiring lenders to post fees and annualized interest rates, and allowing borrowers to pay back loans in installments.
“Whatever measures the Alberta government chooses, we must remember that it is our responsibility as legislators to protect and help our most vulnerable populations,” concluded Swann.