Does not provide 'hard cap' on interest rates

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The McGuinty government's new legislation to stop payday lenders from taking advantage of consumers falls short, according to local MPP Cheri DiNovo, who introduced her own Private Members Bill on the issue last year.

"Finally, they're moving to do something. Whether this will make a difference, my position is it won't," DiNovo said. "They're being vague about this. They don't seem to be heading in the direction we asked."

Introduced Monday, the government's legislation does not go far enough, the MPP said, because it does not put a "hard cap" on the sky-high interest rates. DiNovo is looking for at least a 35 per cent cap - which she admits is still high.

"If you've got a credit card in your pocket with a 35 per cent interest rate, well, you should think about changing credit cards," she said.

Payday lenders are preying on the desperate, DiNovo said.

The majority of these payday lending outlets are located in economically-needy neighbourhoods where many residents struggle to get by.

According to a United Way report released late last year, the number of payday lenders had risen from 39 in 2005 to 317 in 2007. There are 24 in the Parkdale-High Park area.

"There are 10 times as many as 15 years ago across the GTA," DiNovo said, "and those figures are six months out of date. I bet we've added more."

Research shows that interest rates by payday loan operations, when extrapolated to annual levels, range between 300 and 1,000 per cent, DiNovo said.

She's having trouble swallowing a 35 per cent cap, which is the most important aspect the Liberal government has missed. The bill tabled Monday still permits payday loan operators to charge criminal interest rates, she added.

Why the willingness by McGuinty to introduce such legislation now?

"There's pressure on him - the same with the minimum wage. We had a campaign. Fifteen thousand e-mails came in. Anti-poverty groups ACORN (Association of Community Organizations for Reform Now) and the United Way took this on. The province had to act. There was no regulation whatsoever," DiNovo said.

But DiNovo calls the Liberal bill "a photo-op and spin."

"It doesn't say anything, this bill. I don't expect my bill to be passed, but I'll table it (again) next week," she said.