Education over regulation recommended for payday loans in Windsor

City administration is suggesting education over regulation when it comes to dealing with payday loan providers in Windsor.

A report going before City Council Monday is in response to a question raised by Ward 3 Councillor Rino Bortolin on potential options around licensing the businesses.

A payday loan is a fast, short-term loan with high fees, usually making loans to cover a cash shortfall usually until the next paycheque.

Payday loans have been identified as the most expensive form of consumer loans in Ontario, making it difficult to repay in full by the next paycheque, often impacting people living on low-income.

Bortolin says they want to keep as much money as they can in people's pockets.

"There will always be a subset of people who may need these services," he says. "As opposed to constricting the services, we want to make sure people know their options."

Administration is recommending a multi-pronged approach that includes a committee with community representatives from social services and settlement agencies to gather a complete picture of payday loan usage in Windsor, reaching out to financial institutions to explore payday loan alternatives, and developing education materials to explain options to those seeking financial support.

City Council could consider restricting the advertisement of Payday Loans on City of Windsor-owned property, including City Agency, Boards or Commissions.

Rino Bortolin, Ward 3 City Councillor, says licensing payday loan services would not address the need that people have for the service, even if they reduce the number of options available.

"They would just walk to the next outlet because there are no other options or because they are not aware of the options available," he says. "I think this approach would be a good start and I think reaching out to those credit unions and other financial institutions to work on an educational campaign, would be a good start for how we could do this."

According to the report from administration, Kingston, Hamilton, Kitchener, Barrie, Ottawa and Brantford have restrictions in place around how many payday loan establishments are allowed within a given area.

Bortolin believes there's often a knee jerk reaction when something comes up to just licence or control it, but that won't necessarily change the situation in this case.

"I think a more thoughtful approach where we're working with our social service agencies, because that's where a lot of these cheques come from, and sharing that education and spreading that information, and even when people come in to pickup their cheque at City Hall in the 400 building, just to have that conversation face-to-face," he adds.

According to the Ministry of Government and Consumer Services, as of Sept. 14, 2020, there were 17 PLE’s licensed under the Payday Loans Act in Windsor.

Ward 3 had five PLE's listed, while four payday loan establishments were identified in Ward 8.

Windsor City Council meets at 4 p.m. Monday.