Update on the City of Toronto Municipal Code Chapter 545, Licensing of Payday Loan Establishments

Since the introduction of the payday loan licence, a total of 187 establishments have obtained the payday loan licence. The remaining establishments that were eligible for licences have since decided to close their businesses, move their services online, or merge with existing establishments. As licensees are not permitted to sell or transfer their businesses, this attrition means that the limit on the number of establishments in Toronto has decreased from 212 to 187. This report recommends maintaining the regulations established in 2018 and updating the licensing regime to reflect the new 25-ward structure. If adopted, the City-wide total number of establishments permitted would remain unchanged, but the number permitted in each ward would be limited to the number operating in each ward, as of January 1, 2019. It is also recommended that a process be created to allow a payday loan establishment to apply for permission to move outside of a ward, in order to ensure a degree of flexibility should external factors influence the relocation of a payday loan establishment. Staff do not recommend further restrictions on where payday lenders are permitted to operate. While limiting the availability of payday loan establishments may reduce the likelihood of predatory lending, it does not address the consumer's need for credit, as consumers typically access payday loans for emergency situations and for necessary expenses such as car repairs, rent, or utility bills. This report recommends that Social Development, Finance and Administration, Economic Development and Culture, and Toronto Employment and Social Services, in consultation with Municipal Licensing and Standards, consider as part of the Toronto Poverty Reduction Strategy, initiatives to promote lower-cost financial services. This report was written in consultation with Social Development, Finance and Administration, Economic Development and Culture, Toronto Employment and Social Services, City Planning, and Legal Services.

b. Add a provision to require that, in order for a payday loan establishment to obtain and hold a new Chapter 545 licence, it must have been licensed without interruption under the Payday Loans Act, 2008 from May 1, 2018 and provide proof of this, as required by the Executive Director, Municipal Licensing and Standards. c. Add a provision to require that, in order for a payday loan establishment to obtain and hold a renewal of a Chapter 545 licence, it must have been licensed without interruption under the Payday Loans Act, 2008 from May 1, 2018 and under the City of Toronto Municipal Code Chapter 545, Licensing, from January 1, 2019 and provide proof of this, as required by the Executive Director, Municipal Licensing and Standards. d. Add a provision to require that, where the total number of wards in the City is changed and/or ward boundaries are changed, that the total number of payday loan establishments per ward is capped at the total number operating within the geographical area of each ward as it existed on the day the ward number is changed and/or the ward boundary is changed. Location Change Process e. Authorize the Executive Director, Municipal Licensing and Standards, despite the cap on the total number of payday loan establishments permitted in each ward, to consider and decide the deletion of a location in one ward and its replacement with a location in another ward. The application will be considered and may be deemed approved if the following conditions are met: 1. an application is made in the form prescribed by the Executive Director, Municipal Licensing and Standards; 2. the non-refundable application fee set out in the City of Toronto Municipal Code Chapter 441, Fees and Charges, has been paid; 3. the operator and/or payday loan establishment has not been convicted of an offence under the City of Toronto Municipal Code Chapter 545, Licensing, or the Payday Loans Act, 2008 in the preceding three years; 4. the operator and/or payday loan establishment is not associated with any overdue By-law fines or fees, unless the applicant provides proof that such fines or fees have been subsequently paid; and 5. the operator and/or payday loan establishment has not previously been granted a location change or the Executive Director, Municipal Licensing and Standards, has waived this requirement. f. Add a provision to require that the Executive Director, Municipal Licensing and Standards, shall provide written notice to the payday loan operator of a final decision within 30 days. Toronto Poverty Reduction Strategy 2. City Council direct the Executive Director, Social Development, Finance and Administration, the General Manager, Economic Development and Culture, and the General Manager, Toronto Employment and Social Services, in consultation with the Executive Director, Municipal Licensing and Standards, to consider as part of the Toronto Poverty Reduction Strategy, initiatives to promote lower-cost financial services, including the delivery and promotion of financial empowerment supports and the development of inclusive alternative financial products. 3. City Council request the Province of Ontario to review the rules and interest rates around installment loans. Fees and Set Fines 4. City Council amend the City of Toronto Municipal Code Chapter 441, Fees and Charges, to include a $645.53 application fee for a payday loan establishment location change request, adjusted annually based on the Consumer Price Index. Implementation 5. City Council direct that the changes to the City of Toronto Municipal Code Chapter 545, Licensing, come into force on April 1, 2020.