Council considers restrictions on payday loans

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Sarnia City Council will consider new measures Monday to reduce the number of high-interest payday loan facilities authorized in the city.


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“One of the biggest (grindstones) around the neck of anyone who is in debt when they are in poverty,” said Sarnia Mayor Mike Bradley, who called last fall for studying new rules to limit the prevalence of payday lenders in the city.

“I know people have personal choices, but this industry makes deep and deep debt very attractive.”

Several other municipalities have placed zoning restrictions on payday lending establishments while limiting the number allowed since Ontario’s Consumer First Act came into force in 2018, giving these powers to municipalities.

Adult entertainment venues are the only other type of business that municipalities can place similar restrictions on, Bradley said.

The Municipalities Act does not allow establishments to be banned.

Sarnia currently has nine payday lending establishments, while the city’s proposal is to limit the number to seven.

Sarnia, if the board approves the plan on Monday, would create a separate definition of financial institutions for payday lending establishments. The recommendation also calls for a regulation requiring them to stay in “higher order shopping areas” – including the city center and areas around Mitton Village, Northgate Plaza and Lambton Mall – and require spacing of 500 meters. between two establishments.

Existing payday loan establishments in the City of Sarnia.  Dark gray marks areas where they would be allowed, under new restrictions the council is considering on Monday.  (map via City of Sarnia)
Existing payday loan establishments in the City of Sarnia. Dark gray marks areas where they would be allowed, under new restrictions the council is considering on Monday. (map via City of Sarnia)

The zoning would also keep payday loan shops more than two kilometers from local gambling venues and 150 meters from the nearest school, city staff said in a report.


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Existing payday loan stores that do not follow these rules would be classified as “legal, non-compliant” and would not be required to close, provided that an annual license requires proof of proper zoning, a criminal record check, proof of insurance and proof of a current and valid license as a lender under the Provincial Payday Loans Act.

When and if they close, no new payday lending institution would be allowed to open unless the provisions of the regulations were followed.

License fees are offered at $ 305 for a new license and $ 200 for annual renewals – the same as for adult entertainment establishments, said Stacy Forfar, the city’s director of community development services and standards. .

Currently, some of the city’s payday loan stores are clustered closer together than the proposed 500-meter requirement.

The recommended spacing is to make it more difficult for people to take out multiple loans from multiple institutions at once, city officials said.

“I’m still concerned about this (the consolidation), but everywhere else I looked it would be a long and costly battle to try and bankrupt them because they are legitimate businesses,” Bradley said.

Lenders are one of the only options, for example, for people who – for bad credit, lack of address or other reasons – cannot open bank accounts, said Myles Vanni of the Auberge. of the Good Shepherd.

“Therefore, when they receive a check, they have to go to a store to cash it to get the funds, and there is a premium for that,” he said, calling businesses “rather predatory “.


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“We find that people are caught in a very downward cycle when they go into these types of loans because the rates are so expensive,” he said.

A recently announced Lambton County program provide prepaid credit cards instead of checks to welfare recipients could help, he said.

“So they wouldn’t have to go to an establishment and pay the premium. “

A survey about two years ago of users of the Inn of the Good Shepherd food bank – around 900 households – found that more than 60% had used payday loans, Vanni said.

“Virtually all of them had identified that it was a very negative experience,” he said.

Most of the 17 members of the public who submitted comments on the city’s survey responses to the proposal submitted to council were in favor of limiting payday loan stores in Sarnia, according to the city staff report.

An open house in January brought together five members of the public, he said, including two who called for the proposed restrictions to be relaxed.

If passed on Monday, there would be a 21-day appeal period before the new rules take effect, Forfar said.

Point Edward, meanwhile, plans to follow Sarnia’s lead, said chief executive and clerk Jim Burns.

There are currently no payday lending establishments in the village, he said.

“Obviously there isn’t a proliferation of them now, and I think we would like to see that continue,” he said.



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