Bragging rights?

"If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him." So sayeth the Bible. That means the country's payday lending companies - which charge an average annual 782 percent interest rate - don't have the best of reputations to begin with. But The Cash Store Financial Inc. likely did little to boost its own standing with the government when it when it made an "unequivocally false" statement about the Campbell administration's effort to regulate that industry.

According to records obtained exclusively by Public Eye via a freedom of information request, the company - which was then known as Rentcash Inc. - wrote a letter to Ontario payday lenders in 2007 claiming the British Columbia Payday Loan Association had been successful in "blocking" that legislative effort.

In response, then solicitor general John Les's ministerial assistant wrote a strongly worded email to the company's investor relations and government affairs vice president Michael Thompson.

"This statement is unequivocally false," thundered Rachel Curran. "As he stated to you in our meeting earlier this year, the Minister intends to proceed with our legislation - as drafted and without amendments - at the first available opportunity."

"The Minister asks that you retract the letter which has been sent to Ontario lenders, and inform them that the statements you made concerning British Columbia's proposed legislation and your role with respect to its current status are incorrect," continued Ms. Curran.

In response, Mr. Thomspon informed the ministerial assistant, "As you will recall from our meeting the Solicitor General was quite firm in his commitment to pass the Bill by May 31st. We took the government's decision not to do so as a signal that it had reconsidered its approach and was perhaps open to the discussion of amendments."

Nevertheless, Mr. Thompson conceded "the use of the term 'block' was inappropriate and I am happy to retract the use thereof."

The government has since introduced regulations capping the annual interest rate for payday loans at 600 percent. The following is a complete copy of that correspondence.

***

From: Curran, Rachel E SG:EX [mailto:Rachel.Curran@gov.bc.ca]
Sent: Thursday, June 28, 2007 3:11 PM
To: michael.thompson@rentcash.ca
Cc: dave@rentcash.ca; Preyde, Anne M SG:EX
Subject: FW: Your letter to Ontario payday lenders
Importance: High

Mr Thompson:

Our office has received a copy of the attached letter, which the Solicitor General finds highly disturbing.

In the letter, you claim that Rentcash has been successful in "blocking" payday loan legislation in the Province of B.C. This statement is unequivocally false. As he stated to you in our meeting earlier this year, the Minister intends to proceed with our legislation - as drafted and without amendments - at the first available opportunity. This will likely occur during the next sitting of the Legislature in British Columbia.

As we also noted to you during our meeting, you will be consulted along with other payday lenders on the content of the regulations which will accompany our legislation. That consultation processs, as you know, is currently underway and is being conducted by Ministry staff.

The Minister asks that you retract the letter which has been sent to Ontario lenders, and informed them that the statements you made concerning British Columbia's proposed legislation and your role with respect to its current status are incorrect. If you are unable or unwilling to do so, our Ministry will be contacting all Ontario lenders shortly to correct the misinformation which you have distributed.

Please advise with respect to your course of action. Thank you.

Rachel Curran
Ministerial Assistant to the Hon. John Les
Minister of Public Safety & Solicitor General

***

From: Michael Thomspon [mailto:michael.thompson@rentcash.ca]
Sent: Wednesday, July 04, 2007 6:41 PM
To: 'Curran, Rachel E SG:EX'
Cc: 'dave@rentcash.ca'; 'Preyde, Anne M SG:EX'; 'Gordon Reydal'
Subject: RE: Your letter to Ontario payday lenders
Importance: High

Ms. Curran - I received both your phone message and e-mail last week. Please accept my apologies for the delay in reply.

If my comments have been a source of concern to the Minister I would be pleased to issue a correction to lenders in the province of Ontario. As I mentioned during our meeting, Rentcash is a proponent of consumer protection regulation. We were one of the first companies in Canada to eliminate rollovers from our product mix, and our business practices for the most part reflect what is contemplated by Bill 27. I will reiterate that we support the objects and intent of Bill 27. That we have made a legitimate request for amendments to the Bill should not be taken as an effort on our part to prevent the Bill from passing. The use of the term "block" was inappropriate and I am happy to retract the use thereof.

We will continue to support consumer protection measures for the payday loan industry.

As you will recall from our meeting the Solicitor General was quite firm in his commitment to pass the Bill by May 31st. We took the government's decision not to do so as a signal that it had reconsidered its approach and was perhaps open to the discussion of amendments. Rentcash, along with the 20 plus members of the British Columbia Payday Loan association remain optimistic that this proves to be the case.

Per the Solicitor General's recommendations we have had discussions with officials regarding the development of regulations and will continue to make a constructive contribution in the interests of both consumers and industry participants.

Sincerely,

Michael Thompson
Vice President Investor Relations & Government Affairs
Rentcash Inc.

17631 103 Ave. Edmonton, AB, T5S 1N8

***

Rentcash Inc.
17631 103 Ave.
Edmonton, AB Canda T5S 1N8
Phone: (780) 408-5510 Fax: (780) 408-5122
TSX: RCS

August 1, 2007

Dear Ontario Payday Lender:

On June 11, 2007 I wrote to you to encourage you to join the Ontario Payday Loan Association, so that the industry in Ontario could have a powerful voice to lobby the provincial government.

To illustrate why, in my view, an industry association is so important, I highlighted the useful role that the British Columbia Payday Loan Association had played in bringing to the attention of government the many concerns that industry has with legislation that was recently introduced in B.C.

Shortly after writing to you, I received a note from the Chief of Staff to British Columbia's Solicitor General, who took issue with the content of my letter, and demanded that I issue a clarification. I have agreed to do this.

So that there may be no misunderstandings in relation to this matter, below I have reproduced, in full, the Chief of Staff's letter to me and my response to her, for your information

If you have not already done so, I encourage you to join the OPLA now! While the association remains in its early stages, membership is growing quickly. For further details you may contact me directly.

***

August 2, 2007

Mr. Michael Thompson
Vice President
Investor Relations and Government Affairs
Rentcash Inc.
11631 103 Avenue
Edmonton AB T5S 1N8

Dear Mr. Thompson:

I am writing further to the June 28, 2007 e-mail from my assistant, Ms. Rachel Curran, regarding your June 11, 2007 letter to Ontario payday lenders.

In her e-mail, Ms. Curran requested that you retract your letter and inform Ontario payday lenders that the statements made concerning the role of the BC Payday Loan Association in "blocking" British Columbia's proposed legislation were incorrect. To date, I have no received any notice that you have taken steps to correct the misstatement by contacting Ontario payday lenders. I am therefore taking steps to contact those businesses directly to inform them of the misinformation.

I reiterate that it is my expectation that the British Columbia legislation regulating payday lenders in British Columbia will proceed, as drafted and without substative amendments, at the first available opportunity; likely during the next sitting of the Legislature in British Columbia.

Yours truly,

Original signed by:

John Les
Solicitor General

***

August 2, 2007

Mr. Stan Keyes
President
The Canadian Payday Loan Association
2010 - 25 Main Street West
Hamilton ON L8P 1H1

Dear Mr. Keyes:

In a June 11, 2007 letter to all Ontario payday lender operators, Mr. Michael Thompson, Vice President of Rentcash Inc., stated that the BC Payday Loan Association had been instrumental in "blocking" payday loan legislation in the Province of Briish Columbia. This statement is unequivocally false. My expectation is that the legislation will proceed, as drafted and without amendments, at the first available opportunity. This will likely occur during the next sitting of the Legislature in British Columbia.

I have asked that Mr. Thompson retract the letter, and inform Ontario payday lenders that the statements made concerning British Columbia's proposed legislation are incorrect. As I have not received any confirmation from Mr. Thompson regarding my request, I am contacting Ontario lenders, including Ontario members of the Canadian Payday Loan Association, to correct this misinformation.

Yours truly,

Original signed by:

John Les
Solicitor General

***

Rentcash Inc.
17631 103 Ave.
Edmonton, AB Canda T5S 1N8
Phone: (780) 408-5510 Fax: (780) 408-5122
TSX: RCS

August 9, 2007

Honourable John Les
Minister of Public Safety and Solicitor General
Rm. 236 Parliament Buildings
Victoria, BC
V8V 1X4

Minister Les:

I am in receipt of your letter of August 2, 2007.

Please note that on July 4, 2007, I replied directly to Ms. Curran, via e-mail, in response to her e-mail to me of June 28, 2007. In my correspondence to her I acknowledged my misstatement. I made a clear commitment to issue a clarification to lenders in Ontario. In keeping with this commitment, on August 1, 2007, this clarification was sent to 60 lenders in Ontario. Having done so, I was of the belief I had addressed your quite legitimate concerns.

Copies of all above referenced correspondence are attached to this letter.

As previously stated, Rentcash strongly supports the objects and intents of Bill 27. It includes many necessary provisions to protect consumers, including a much-needed prohibition on rollovers, and it provides the government with requisite scope to monitor industry practices. However, in our view, to protect the public interest and to ensure adequate competition within industry, Bill 27 requires amendment. Pursuant to your recommendation we have submitted technical papers to your officials in this regard. Your letter of August 2 suggests that you may no longer be open to the possibility of amending the Bill. This is somewhat discouraging. Bill 27 is at an early stage of progress through the Legislature and could readily be amended without unduly disrupting its advance on the Order Paper.

It is my understanding through correspondence with Kevin Isfeld, President of the British Columbia Payday Loan Association, that Rentcash is not alone in its concerns regarding the government's lack of direct consultation with lenders prior to tabling of the Bill.

In addition to these lenders, there are a number of third party service providers that will be impacted by the legislation who, similarly, were not consulted in the drafting phase. Clearly, it is within the prerogative of the government to refer Bill 27 to a standing or special committee at second reading, to allow for requisite consultations to take place. This would not unduly hamper advancement of the Bill, but would instead provide legislators the opportunity to consider proposed amendments to the Bill. Members of the committee would have an opportunity to hear directly from industry participants, rather than relying exclusively on the advice of departmental officials.

As I have indicated in previous correspondence, including my e-mail to Ms. Curran, Rentcash has raised legitimate issues regarding some aspects of Bill 27 and the impact of the Bill on business owners and operators in the province. That we have opposed aspects of the Bill should not be taken or construed as an effort to thwart regulation of the industry.

Rentcash is a leader in consumer protection and was one of the first - and one of the only a few - companies in Canada to eliminate rollovers from its product mix. Our preference, clearly, is for the industry to be regulated, providing it is done in a manner that does not restrict competition or harm consumers. In our opinion the Bill does not strike an appropriate balance between facilitating competition and protecting consumers, nor can outstanding issues by properly resolved exclusively through the regulatory development phase.

As you are aware, several other provincial jurisdictions are moving forward with legislation and regulation. Other jurisdictions that face similar issues have found it beneficial to ensure that legislation and regulations are properly matched.

Minister, I urge you to consider referring the Bill to a standing committee at second reading an to give members of the assembly an opportunity to hear from all stakeholders and to consider possible amendments to the Bill. Given that this is the Province's first effort at industry regulation, taking a little extra time to get things right would not be unreasonable.

Sincerely,

Michael Thompson
Vice President Investor Relations & Government Affairs

Enc. 2

cc. Honourable Michael de Jong, Government House Leader and Minister of Aboriginal Relations and Reconciliation
Rachel Curran, Ministerial Assistant to the Hon. John Les
Brian Sims, Ministerial Assistant to the Hon. John Les
Anne Preyde, Manager of Legislation
Kevin Isfeld, President BCPLA

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