Regulator cuts fees for payday loans in Nova Scotia

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The province’s Utilities and Review Board is reducing fees charged to Nova Scotians for payday loans.

The regulator also wants clearer information from payday lenders on the number of borrowers unable to repay.

Nova Scotians currently pay the second highest payday loan fees in the country: $19 for every $100 borrowed for a two-week period.

This fee will drop to $17 on September 1 and $15 on January 1, 2024.

“I’m happy with it,” said David Roberts, a Halifax lawyer who acts as a consumer advocate. He argued for the changes at a public council hearing in March, part of a regular review of the industry every three years.

“They align us where we should be, which is with the rest of the country,” he said.

Lenders oppose lower fees

A spokesperson for small payday lenders told the UARB that lower fees would be unsustainable for lenders.

But Roberts says the industry is still thriving in other parts of Canada, in some cases branching out into other types of business loans such as installment loans.

“The majority of Canadians already live in jurisdictions that allow nothing more than $15 percent,” he said.

While the UARB has the right to set fees for payday loans, the other two recommendations in its 2022 report require provincial government approval.

The first is that people who take out more than two payday loans in a two-month period should be given one or two pay period extensions to repay those loans.

Service Nova Scotia, the department responsible for enforcing payday loan rules, rejected the same recommendation in 2015, saying it was too onerous due to technical issues and privacy concerns.

The council’s second recommendation is that payday lenders disclose the total number and value of Nova Scotians’ overdue loans each year.

Roberts says the public deserves more transparency because lenders currently classify all late payments as “defaults,” even if the loan is eventually repaid.

He says default rates matter because the board sets loan fees based on industry profitability.

“Everyone knows what the difference is between a loan that never gets collected and a loan that’s a few days late,” Roberts said. “That could have different implications in terms of the performance of the industry, the payday loan industry.”

Upcoming consultation

The report says Service Nova Scotia is reluctant to follow its advice.

“Service NS has indicated that it will need to conduct research and consultation with the payday loan industry before deciding whether to implement these two recommendations,” the report said.

Roberts is disappointed.

“I think the board said the time for studies is over and it should be done. And that’s something we totally agree with.”

Meanwhile, Service Nova Scotia says it is committed to continuing discussions with payday lenders.

“We look forward to reviewing the UARB report,” spokesman Blaise Theriault wrote in an emailed statement. “Once we have reviewed, we will identify any necessary consultation and research before making a decision on next steps.”

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