"We need a government that understands the financial struggles of Canadians, not a government that thinks that most families earnings are in the $120,000 range, as our Prime Minister said a few days ago." — James Clancy, NUPGE National President
Ottawa (03 Sept. 2015) — When we think of predatory loan sharks, we usually think of Money Mart, The Cash Store, Instaloans and the like.
What most people don't know is that places like CitiFinancial and many banks offer the same kind of high-interest loans to people who cannot qualify for lower-interest loans or lines of credit.
So, when banks reject people for loans — even high-interest ones — to help during an unexpected crisis, more and more people are turning to these lenders, and falling into a pit of financial chaos.
Fighting back against high-interest lenders
A new Operation Maple video highlights how some people who have been caught in this debt trap are making these lenders, and those who invest in them, accountable.
The video, Stuck In The Jaws Of Predatory Loan Sharks, profiles Toronto ACORN member Donna Borden as she mobilizes members of her community to take on the CEOs who are benefiting from the lack of regulation in the industry and the dependence on the debt spiral.
Under the loan from CitiFinancial, Borden ended up owing over $25,000 on a $10,000 loan.
Through her activism, Borden uncovers that many other banks and investment companies are actually investing in these predatory lenders and making profits.
"They won't invest into people like me or you but they invest in the people who provided predatory loans and it's just not right," says Borden.
More regulation required
Canadian law prohibits lenders from using predatory interest rates above 60 per cent. To skirt the regulation, lenders will set rates just below that rate.
Several provincial governments have put in place regulations to restrict financial lenders as well when it comes to interest rates. Seven provinces have legislation, but the approaches differ. Manitoba has the toughest rules, capping payday loan fees at $17 per $100 borrowed, while Prince Edward Island allows lenders to charge up to $25 per $100.
In Quebec, payday loan companies are illegal, while in Ontario, only payday loans under $1,500 are covered by provincial legislation.
Electing a government that is in touch with Canadians
"According to financial experts, and the government's own legislative definition, Canada is back in a recession," says James Clancy, National President of the National Union of Public and General Employees (NUPGE). "We still have not recovered fully from the last recession in 2008, and now more Canadians are going to struggle to make ends meet."
"We need a government that understands the financial struggles of Canadians," Clancy continued. "Not a government that thinks that most families earnings are in the $120,000 range, as our Prime Minister said a few days ago. We need a government that will help create the conditions for people to get good jobs to get ahead, rather than falling into a place where high-interest loans are the only option."
"In this election, we don't have to settle for the same tired answers of previous governments," Clancy continued. "We can do better. We must do better — for our families, our communities and our economy. It's time for change"
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE