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, which includes 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 pesident 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,” he adds.

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.

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.

The CACFS is a national association of payday loan providers that offer small-sum unsecured short-term credit and operate retail outlets across Canada.