The Cash Store is no longer offering Manitoba customers new lines of credit from third-party lenders, according to the Manitoba Consumer Protection Office.
The office said the development follows a court ruling in Ontario.
Cash Store Financial Inc., which operates as The Cash Store, has one outlet in Brandon and several in Winnipeg.
It had been offering brokered lines of credit in which The Cash Store acted as a “middle man” and arranged for third-party lenders to provide the lines of credit. The Cash Store earned a broker fee for each transaction.
The company began offering the brokered line of credit product exclusively when it stopped offering payday loans in Manitoba.
The Ontario Superior Court of Justice, through proceedings under the Companies Creditors’ Arrangement Act, recently granted a request by the court-appointed chief restructuring officer for Cash Store Financial Services to discontinue offering these credit products.
The brokered loans saw consumers charged interest rates as high as 59.9 per cent (just under the Criminal code limit of 60 per cent) plus fees.
This request was made in response to concerns raised by provincial regulators, including those in Manitoba.
Following up on consumer complaints, the Manitoba Consumer Protection Office launched an investigation that determined that Cash Store Financial, operating as The Cash Store and Instaloans, was violating Manitoba’s laws governing payday loans and loan disclosure requirements.
An employee at The Cash Store outlet on Victoria Avenue referred the Brandon Sun’s request for comment to the company’s head office in Edmonton.
The spokesperson, who would not provide his name, said he “can’t say either way” when asked if the Brandon store would stay open, or comment on how this change will affect business.
» Winnipeg Free Press, Brandon Sun