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Toronto’s New Payday Loan Rules Must Put Consumers First


April 10, 2018

OTTAWA –As Toronto City Hall gets set to regulate payday loan shops through zoning bylaws, it will need to put consumers first. Brian Dijkema, an economic specialist at think tank Cardus, tapped into extensive research on payday loans to create a new set of guidelines for municipalities.

“Focusing on consumers means recognizing that the demand for short-term, small dollar loans will always be there,” argues Dijkema. “Let’s be careful not to do anything that pushes vulnerable people to use other worse options, like loan sharks or shady, under-the-table lenders.”

The new municipal guidelines suggest the most important measure Toronto can take goes beyond creating new restrictions for payday loan shops.

“The best way to keep people from getting caught in the payday loan trap is to offer them affordable, easy-to-access alternatives,” says Dijkema. “Cities can help create these alternatives by encouraging cooperation between community organizations and credit unions, offering the use of municipal space for these alternatives to use, and granting them access to public transit advertising space.”

The guidelines also make several other recommendations:

  • Cities should study the local market, get to know the borrowers and lenders, and collect unbiased data before enacting new payday loan zoning bylaws.
  • Cities should avoid setting arbitrary caps on the number of payday loan shops allowed in any given area, leaving vulnerable people with fewer regulated options to use and more dependent on loan sharks or completely unregulated online lenders.
  • Cities should take a targeted, neighbourhood-by-neighbourhood approach to zoning powers.
  • Cities should avoid redundant licensing requirements, such as payday loan signage requirements or mandatory provision of credit counselling information, which provincial law already covers.

Download a free copy of the guidelines here.


Daniel Proussalidis
Cardus – Director of Communications