Canada wildfire leaves Albertans vulnerable to payday lenders -minister

TORONTO, May 12 (Reuters) - Payday lenders could take
advantage of cash-strapped evacuees who were forced to leave
their homes when a massive wildfire spread through the Fort
McMurray, Alberta, area, an Alberta government minister said on
Thursday.
The remarks by Alberta's Service Minister Stephanie McLean
came as the Canadian province announced a crackdown on payday
lenders, restricting the amount lenders can charge to C$15 per
C$100 borrowed, from C$23 at present.
Payday lenders typically loan customers small amounts of
money at high interest rates, on the understanding the loan will
be repaid when the customers receive their next paycheck.
The proposals cap the rate the lenders can charge at the
lowest level in Canada, below Manitoba which restricts the cost
of borrowing to C$17 per C$100 borrowed.
Alberta had been working on the new proposals for several
months before the Fort McMurray wildfire, but McLean said
"events of the last week have left many Albertans unfortunately
even more vulnerable."
"I think folks in a tough economic situation, that aren't
working if they've been evacuated, are more vulnerable
financially. We need to be diligent here and monitor the
situation as we go forward and respond accordingly," she said.
The provincial government has promised evacuees pre-paid
debit cards to cover immediate costs, with C$1,250 per adult and
C$500 per dependent, expected to cost about C$100 million.
The left-leaning NDP government proposed legislation in
March to end what it termed "predatory" lending, expressing
concern that the tough economy was causing more hard-pressed
Albertans to resort to payday loans.
Payday lenders have grown in popularity because they offer
quick access to cash without the extensive checks that banks
make and are prepared to lend to borrowers with damaged credit
records who may have struggled to pay back loans in the past.
Such access to money, however, comes at a cost. Consumer
groups say the interest rates charged by payday lenders,
typically as high as 600 percent on an annualized basis, can
leave borrowers trapped in crippling cycles of debt.
Those concerns have led Canada's financial consumer watchdog
to launch an investigation into the industry, while several
other provinces were also reviewing regulations.