NDP MPP Cheri DiNovo says that the McGuinty government’s failure to regulate interest rates on payday loans in Ontario will attract payday lenders who have exited U.S. markets with strict interest rate caps.

“We are now seen as the best haven for usury because we don’t have payday lending regulation in Ontario. American payday loan sharks will look north of the border to prey on some of our province’s most economically vulnerable,” says DiNovo, pointing to American states such as Oregon, New Hampshire, and now Colorado which have set Annual Percentage Rate caps on payday loans at 36 per cent.

Earlier this month the McGuinty government tabled a bill on payday lenders that did not regulate interest rates. DiNovo then re-tabled her private members bill modeled after legislation in Quebec that sets a 35 per cent cap in the industry.

“I re-tabled my bill last week in response to the government’s do-nothing legislation,” said DiNovo.

Bob Whitelaw, founding President of the Canadian Payday Loan Association (CPLA) and now working as a consultant with credit unions agrees.

“Ontario is last when it comes to regulation in the payday lending industry, positioning it as an attractive place for payday lenders to do business. Unfortunately, the Ontario Government’s proposed legislation will not stop the proliferation of payday lenders setting up in this province,” said Whitelaw.

“Instead of setting a cap on interest rates, this government prefers to consult on what is already considered criminal – exorbitant interest rates that are unethical and simply wrong,” said DiNovo. “We need to prevent American payday loan sharks from coming to Ontario by setting an interest cap of 35 per cent immediately.”