Ontario Needs New Approach To Limit Harm Of High-cost Loans



   April 5, 2021

OTTAWA, ON – Ontario cannot regulate and ban its way out of high-cost credit agreements that harm customers who have little to no access to safe and affordable credit. The province needs to find a new approach, think thank Cardus says in its submission to consultations about new protections for Ontarians using forms of high-cost credit that are not payday loans, yet still leave consumers buried by debt. Cardus made several key recommendations regarding new consumer protections for Ontarians for high-cost credit arrangements like installment loans, auto title loans, and rent-to-own agreements.

“Any new protections should be based on evidence that the regulatory changes will indeed benefit borrowers, and should include provisions for measuring their effects on users of high-cost credit agreements,” write Brian Dijkema, vice president of external affairs at Cardus, and Johanna Lewis, a Cardus researcher, in their advice to the government. 

The Cardus submission also notes that Ontario didn’t collect or make available data on how the province’s 2017 changes to payday loan regulations affected consumer behaviour.

“As a result, it has not been possible to determine how these changes affected payday loan users and their access to credit,” write Dijkema and Lewis. “Stronger regulation of high-cost credit agreements should be based on, and include provisions for collecting, evidence on how they affect consumers.”

Ultimately, regulations won’t solve the problem of inequatable access to safe and affordable credit. Instead, Cardus recommends a four-step plan to build a better Ontario credit market that’s fairer for all:

  1. Creating social impact bonds that could provide capital for, and a return to, those who who offer small-dollar emergency alternatives to payday loans.
  2. Dedication of a small amount of funds to act as a backstop to loan losses for alternative startups to compete with payday loans and other high-cost credit.
  3. Removal of regulatory barriers standing in the way of civil-society institutions, including charitable institutions such as churches, mosques, synagogues, temples, and community foundations, from providing capital and partnering with community-based financial institutions.
  4. Consultation with financial tech firms and banks to discover where regulatory hurdles are preventing innovation.

The advice from Cardus for Ontario’s high-cost credit consultation is freely available online.

 Daniel Proussalidis
 Cardus – Director of Communications

About Cardus
Cardus is a non-partisan, faith-based think tank, and registered charity dedicated to promoting a flourishing society through independent research, robust public dialogue, and thought-provoking commentary. To learn more, visit our website, follow us on Twitter, and like us on Facebook.


Cardus is a non-partisan think tank dedicated to clarifying and strengthening, through research and dialogue, the ways in which society's institutions can work together for the common good.