Payday Loan Industry Association unveils stronger Code of Best Business Practices to protect consumers

Payday Loan Industry Association unveils stronger Code of Best Business Practices to protect consumers

Stronger Code widens gap between CACFS members and non-members

Tougher new rules designed to increase protection
for payday loan customers were unveiled today by the Canadian Association of
Community Financial Service Providers (CACFS). All members of the industry
association - large, medium and small "payday loan" companies and their retail
stores across Canada have agreed to abide by a revised Code of Best Business
Practices, which sets stricter consumer protection standards that members must
observe.

"The CACFS wants government to regulate the payday lending industry,"
says CACFS President and CEO Bob Whitelaw. "Until regulation is introduced, we
are voluntarily improving our members' business practices by adopting a
stronger Code of Best Business Practices to protect payday loan customers.
It's a significant step that further widens the gap between CACFS members and
non-members."

The code will prevent such practices as granting loans to welfare
recipients, using a borrower's assets as collateral, garnering a customer's
wages, or providing multiple loans in excess of the initial amount for which a
client is approved. To promote the use of credit counselling for borrowers who
have defaulted more than once, a payday lender will offer to forgo the accrual
of interest on a loan if the customer demonstrates that he or she has
completed a credit counselling course. The code also limits the fee members
can charge customers for cheques returned NSF to the fee levels the top five
Canadian banks charge when cheques are returned.

"Adherence to Code standards, which take effect September 1, 2005, will
be a condition of membership in the CACFS, says Whitelaw. "However, only CACFS
members are bound by this code. We are calling for government regulation
because the CACFS has no tools to force payday lenders who are not members to
join the association and follow our consumer protection practices."

Association members will be required to prominently display and make
available a Guide to Responsible Borrowing and other credit counselling
brochures in their stores. Members must also prominently display in their
storefronts the revised Code of Best Business Practices and the CACFS logo,
showing membership in the Association and compliance with the new Code.

An Environics survey on Canadians' attitudes about the payday loan
industry, released June 13, 2005, reveals that more than two-thirds (67%) of
Canadians believe people who need or want payday loans should have access to
them. Customers also indicated in the survey that the industry provides
legitimate services that are not available elsewhere. Customers stated that
they are more aware of the exact amounts of their administrative fees and
interest paid for their transactions with payday loan providers than they are
with their credit cards or bank accounts. The vast majority (95%) of payday
loan customers believe payday loans are a better option than alternatives such
as pawnbrokers.

"The survey confirms we are providing a service Canadians want and need,"
says Whitelaw. "But consumers and payday lenders are operating without
government mandated consumer protection. In the absence of government
regulation, we are acting voluntarily to fill the regulatory gap and adopting
this stronger Code of Best Business Practices."

About CACFS

The Canadian Association of Community Financial Service Providers is a
national association of payday loan providers that offer small-sum unsecured
short-term credit and operate retail outlets across Canada.