Financial initiative helps those caught in the cycle of payday lending

By Jacob Hoytema – 

The Causeway Work Centre, a Hintonburg non-profit organization, has launched a new initiative aimed at helping those caught in the cycle of payday lending. On Friday, November 4, Causeway workers, credit union representatives, and community members packed into the Centre’s main hall to mark the debut of the Causeway Community Finance Fund (CCFF), a program that Causeway is calling the first of its kind in Ontario.

“Clearly there was a need, and we felt that we needed to do something,” said Causeway’s Executive Director Don Palmer of the payday loan problem in Ottawa.

(L-R) Rideau-Vanier Councillor Mathieu Fleury, Alterna Savings CEO and President Robert Paterson, Kitchissippi Councillor Jeff Leiper, Causeway Executive Director Don Palmer, Somerset Councillor Catherine McKenney, Causeway Director of Social Enterprise and Social Finance Doug Pawson, and Ottawa-Centre MPP Yasir Naqvi.
(L-R) Rideau-Vanier Councillor Mathieu Fleury, Alterna Savings CEO and President Robert Paterson, Kitchissippi Councillor Jeff Leiper, Causeway Executive Director Don Palmer, Somerset Councillor Catherine McKenney, Causeway Director of Social Enterprise and Social Finance Doug Pawson, and Ottawa-Centre MPP Yasir Naqvi. Photo by Jacob Hoytema

Through the new program, Causeway will assist individuals who are in debt trouble with predatory payday lenders — services that give small loans at precarious interest rates that often lead to debt spirals.

Speaking at the CCFF launch, Don said borrowers often go to payday lenders because of unforeseen or accidental expense, but soon find themselves overwhelmed by the repayment costs.

“A lot of the staff here at Causeway often felt powerless,” Don said. “We help people find jobs, we’re giving them a step up economically, and then when something bad happens to them, we’ve watched them get caught in a spiral of debt.”

According to a 2014 report by an advisory panel to the Ontario Ministry of Consumer Safety, payday loan borrowers are generally of a lower income and at a dead end for obtaining money from stabler sources such as banks or other forms of credit, and are thus “likely to be in financial distress.”

The CCFF will, through Causeway, connect borrowers to financial aid from one of three local credit unions — Alterna Savings, Your Credit Union, and Frontline Credit Union — that helped launch the program. The Fund goes into its pilot year with a reservoir of $100,000, gathered from contributions by Causeway, Entrepreneurship & Innovation Ottawa, and the three credit unions.

“I think it was a sum total of 60 seconds that went by before all the unanimous replies came back from the three of us that we were going to do this,” says Rob Paterson, CEO of Alterna Savings. “It was simply a no-brainer for us.”

Kitchissippi Ward Councillor Jeff Leiper was present at the launch, as were Somerset Ward, Councillor Catherine McKenney, and Rideau-Vanier Ward Councillor, Mathieu Fleury, who earlier this year tabled a motion seeking tougher municipal regulations for payday loan services.

Jeff said he hopes to see the City introduce more measures such as Mathieu’s motion that will reign in the actions of predatory lenders. “We can do as a city some reasonably significant work in order to address predatory lending,” he said, later referring ideas such as creating a new classification or license for payday loan services and limiting the number of payday loan locations that can be within a certain area.

Ottawa Centre MPP and Ontario Attorney General, Yasir Naqvi, also spoke at the event. He said the provincial and municipal governments need to work with banks and credit unions to provide solutions to the payday lending problem.

“I’m really hopeful that this spreads throughout Ontario. This is a great pilot, we’re the right size of city to be able to understand how it will work,” Yasir said.

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