Banking on the Margins
Our current payday loan market is failing consumers and society and government regulations alone cannot solve the current situation. Our new report, Banking on the Margins, aims at reforming Canada's payday loan market. In this report, we call for joint efforts between government, banks, credit unions and charities to provide customers with lower rate loans as an alternative to payday loans.
The report outlines a three pronged approach to for a small-dollar loan market that better aligns the interests of consumers with providers:
--Moving government focus away from interest rate caps and towards mandating longer loan terms which can sustain the market while increasing affordability for consumers.
--Partnership between government, charities, and financial institutions to provide funds for loan loss reserves which will encourage innovation in the small dollar market.
--The introduction of social impact bonds which will reward organizations that achieve outcomes that enable indebted consumers.