ottawa, ontario, March 12, 2024 /CNW/ – A new report commissioned by the Canadian Lenders Association (CLA) and conducted by Ernst & Young LLP highlights the serious and far-reaching implications of the federal government's new interest rate cap. There is. This study shows that lowering the allowable interest rate; $10.7 billion Nearly 50,000 jobs are eliminated from the Canadian economy each year and costs borrowers up to $20 million. $4.4 billion Being turned down by regulated lenders results in additional interest being paid to payday lenders and illegal lenders.
“The report shows that this change will have far-reaching and extremely detrimental effects on Canada's economy,” he said. Gary Schwartz, President and Chief Executive Officer of the Canadian Association of Financial Merchants. “It is clear that the proposed changes to the maximum allowable interest rate will only exacerbate existing affordability challenges. Unfortunately, this is another example of the federal government abandoning evidence-based decision-making. We continue to urge them to meet and work together on better solutions that truly support the economic health of Canadians.”
Canada's Currently, the Criminal Code sets a maximum criminal interest rate of 47.2% per annum. However, the Liberal government recently passed legislation that would reduce this rate to 35%. As a result of these changes, the report says, Canada's economy will suffer:
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$10.7 billion in the lost GDP
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2 million consumers Risk of not being able to obtain regulated financing
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$4.4 billion Excess interest paid to payday and illegal lenders as a result of Canadians being locked out of regulated lenders.
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49,148 jobs excluded
This economic impact analysis highlights the urgent need for a balanced policy-making approach that protects Canadians' access to credit while safeguarding the integrity of the financial system. The findings highlight the need to thoroughly consider the broader socio-economic impacts of regulatory changes.
CLA continues to call for urgent government cooperation to avoid a loss of trust for millions of Canadians.
For more information, visit www.butnowwhat.ca and add your voice to prevent the government from closing the door to your financial future.
regarding Canadian Financiers Association
The Canadian Lenders Association (CLA) supports the growth of banks and non-bank lending businesses. We also support financing in adjacent sectors such as BaaS, core banking, open banking, DE&I, and sustainable finance frameworks. We currently represent and advocate for over 300 of her companies around the world. Canada Businesses participating in small business, consumer, housing, equipment, automobile, and mortgage financing. CLA does not represent the payday lending sector.
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www.butnowwhat.ca
Additional facts:
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Devastating impact on the alternative lender industry: The study finds that many lenders focused on serving high-risk customers could struggle to survive, putting the industry's 1,000 Canadian jobs and 291 small businesses at risk. It warns that there is. The report further indicates that if these lenders exit the market, credit access problems may worsen and borrowers may turn to non-traditional, high-interest lenders.
Source Canadian Financial Services Association
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