Conceptions of Borrowers and Lenders in the Canadian Payday Loan Regulatory Process: The Evidence from Manitoba and Nova Scotia

Commentators characterize thinking aboutpaydayloans as falling into two general perspectives. In one theory payday loans respond to market demand and are a sensible choice for a consumer with limited assets, credit, or other support when an unexpected financial need arises. The opposing theory holds that the loans are usurious and exploit vulnerable low-income borrowers. In 2007, amendments were passed exempting payday loans from the application of the criminal interest rate provisions of the Criminal Code if they were made by companies licensed by a province with a regulatory scheme. The author examines how federal and provincial lawmakers and administrative decision-makers understood payday loans and those who use them, and how the conceptualizations of borrowers and the industry are reflected in the regulatory regimes that emerged. To do this the author considers the federal legislative debates about the Criminal Code amendments and the subsequent cost-setting decisions in Manitoba and Nova Scotia, the first two provinces to regulate payday lending. Despite Manitoba's focus on more vulnerable borrowers, she concludes that, assessed as a whole, the regulatory regimes better correspond to the "market demand" school of thought about payday loans.