ONTARIO, Canada–Ontario credit unions are receiving expanded powers to take on payday lenders in the region. As part of a package of updates to a new law governing credit unions, Finance Minister Charles Sousa said the updated Credit Unions and Caisses Populaires Act includes provisions allowing credit unions to own insurance brokerages, to do business with cities, school boards and hospitals, and provides for an increase in deposit insurance coverage to $250,000 from $100,000.
"I know that in many communities payday loans and predatory financing products are an issue," said Sousa, according to Spec.com. "We want people who are most vulnerable to have access to an account. Credit unions have offered to facilitate that."
Kelly McGiffin, CEO of FirstOntario Credit Union, was quoted by Spec.com as saying his CU will announce a payday loan program within six months that will include small, short-term loans and financial education.
"We believe it may need a storefront that looks and talks like a payday lender but has a kinder, gentler approach that includes a segue into traditional banking," he told Spec.com. "It will be almost a halfway house for financial services."
Tony Irwin, chair of the Canadian Payday Loan Association, told Spec.com his group isn't concerned about increased competition and feels there will always be room in the market for its products and services.