EDMONTON – The Cash Store Financial Services Inc. (TSX:CFS) says the Ontario government has as filed an application to start legal proceedings against the company.
The legal action relates to the company’s basic line of credit product offering introduced in February to replace its payday loans.
The company has an application for judicial review seeking a declaration that certain provisions of the regulations made under the Ontario Payday Loans Act are void and unenforceable. It is scheduled to be heard Oct. 2.
However, the new application by the Ministry of Consumer Services seeks a declaration that the basic line of credit product is subject to the province’s Payday Loans Act and that Cash Store must obtain a broker licence to offer it irrespective of the validity of the regulations.
Cash Store Financial says the government has attempted since September 2011 to force it to deliver payday loans in cash, rather than the electronic methods it now uses.
It says it will not do this because it’s unwilling to place employees and customers at risk by having them handle cash.
The Edmonton-based company says it remains committed to maintaining ongoing dialogue with the government, but contends its operations in Ontario are in compliance with all applicable laws and intends to oppose the latest application.
Cash Store Financial and its Instaloans Inc. banner primarily act as lenders and brokers to facilitate short-term advances and provide other financial services to income-earning consumers who may not be able to obtain them from traditional financial institutions.