Where there is a need.
There is a solution
An open letter to Albertans from Cashco Financial
Last week the Alberta Government introduced new legislation to further regulate small-dollar, short-term loans.
Since it will impact our relationship with you, we are reaching out to inform you on what’s going on with us, Cashco Financial.
The legislation, Bill-15, proposes drastic changes to the fees, terms, conditions, products, and services we provide for you.
If you just read the headlines, it looks like good news for you, but the opposite is likely true.
To be clear, Cashco Financial fully endorses the government’s desire to protect vulnerable hard to bank Albertans, give a break to the working poor, and bring alternative finance into the mainstream.
However, we must respectfully disagree with how they are going about it. Their actions will cause unintended consequences for you, and that is of grave concern to us.
It goes without saying that this will have an immediate impact on our company and our 450 fantastic employees. Hard choices lay ahead for us as we try to find a way to move forward under the new regulations.
But more than that, we are concerned that with tighter rules and less providers, our clients -along with thousands of other under-banked, underserved Albertans- will lose convenient access to small-dollar, short-term loans. We don’t think that’s right or fair.
We fear that the void caused by lack of access to these services, will encourage off–shore online lenders to take over the market, leaving you hostage to the perils of an un-regulated market.
Yes, there are problems in the system and a whole bunch of things need to be fixed.
The good news is they can be fixed. But, the simple solution will take hard work, innovation, and productive co-operation from all stake-holders.
Fortunately, some solutions to this complex issue have already been presented with clarity, and reason. Momentum; a Calgary based, poverty advocacy organization and a driving force behind the new legislation, did a comprehensive well-researched report.
The report, ‘Fair Financing: Expanding Small-Dollar Short-Term Credit for Albertans’, although critical of some aspects of the industry, also de-bunks many myths, re-confirms the need for our products and services, and reveals the real costs of providing these services to Albertans.
It identifies three distinct client groups. Thus, making a case that each group needs and deserves access to suitable and affordable credit that is customized to their situation.
It goes on to suggest that the losses incurred by providing high risk, low fee loans to the ‘hard to bank’ segment should be shared by all concerned parties including: the government, financial institutions, advocacy organizations, philanthropists, and the alternative finance industry, our industry.
As a proud Albertan company, we look to the future to fulfill our core purpose to “provide relief today, and hope for tomorrow.” But without meaningful effort from all stakeholders, this cannot happen.
To make it happen we will dedicate our time and effort to undertake the following initiatives. We will do all we can to protect and provide access to small-dollar, short-term loans, and keep our employees working.
- We will reach out to the Premier and Ministers to offer our support, insight, know-how, and resources to help them achieve their goals. We will ask them to seriously discuss, consider, and adopt some of the recommendations in the Momentum report.
- We will open channels with the Alberta Treasury Branch, Servus Credit Union, and other banking and financial institutions to explore possible partnerships and joint ventures. These partnerships would allow clients entry level access not only to credit and loans, but also to savings accounts and credit cards to provide a pathway to conventional banking.
- We will initiate open and honest dialogue with Momentum, United Way, Acorn, and any other advocacy or community group that wants to help their constituents get suitable access to loans and credit.
- We will refer the most needy to available community services.As well, we will ramp up efforts to teach and encourage financial literacy and fiscal responsibility through online tools, credit counselling services, and money management advice.
The new law comes into effect on Monday, August 1st, 2016. Until then we will work on the issues described here in the hopes that we will emerge with an outcome that is truly good news for all.
Chief Executive Officer