NDP legislation would empower credit unions, reduce predatory payday loans

HALIFAX - The NDP Caucus will introduce legislation to empower credit unions in Nova Scotia to offer microcredit loans. This would be an alternative to payday loan companies that charge vulnerable borrowers exorbitant interest rates.

“Payday loan companies exploit poor people by charging effective interest rates that can be as high as 600 per cent. Many Nova Scotians are forced to use payday loans due to a lack of other financial alternatives, and then they get stuck in a vicious repayment cycle,” said Susan Leblanc, MLA for Dartmouth North. “This legislation would help thousands of people take back control of their finances from destructive payday loan companies.”

The Utility and Review Board is currently reviewing payday loans in Nova Scotia. From July 2017 to June 2018 in Nova Scotia there were over 200,000 payday loans issued, with a total value of over $100 million.

“The Credit Union system is yearning to offer alternative products to payday loans to its members and communities, if only the provincial government would allow them some flexibility,” said Abad Khan, a former board member with iNova Credit Union in Halifax. “Credit Union microcredit loans would have much lower interest rates, and this would help people in difficult situations. This can help make sure an unexpected expense does not lead into a predatory loans cycle and further financial despair.”

The legislation would allow Credit Unions to set up microcredit loans that would be guaranteed by the provincial government, as it does for small business loans at the credit unions.

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