Networking on the Margins:The Regulation of Payday Lending in Canada

The contemporary emergence of payday lending as a major source of high-cost short-term credit for credit-constrained populations has prompted debates among government officials, business representatives, advocacy groups and academics over how best to regulate the industry. Such debates typically focus on the prevailing lending practices and interest charges in the industry. While critics associate these with usury, supporters of payday lenders defend them as appropriately priced responses to market demand. This dissertation seeks to contextualize, and contribute to a deeper understanding of, the terms of these debates through an exploration of the recently concluded political exercise in Canada where responsibility for the governance of payday lending has been shifted from the federal government, with its criminal law power over usury, to provincial governments with their various regulatory powers over licensing and consumer protection. The dissertation begins with the observation that there are competing moral discourses about money and interest simultaneously embedded in the financial policy-making process in Canada, a fact that has complicated regulatory efforts aimed at payday lending. While these efforts have largely been informed by varying assessments of the transparency and competiveness of the payday lending market, this dissertation contends that a conceptually more useful way of understanding this market is to study the organizational and marketing strategies employed by payday lenders to indentify and retain a stable customer base, and the reciprocal moves on the part of customers to improve upon their terms of trade. In detailing the political process which culminated in a new regulatory regime for payday lending, this dissertation draws on the “regulation through networks” literature to help explain its progress. A major contribution this dissertation makes to this explanatory approach is in its emphasis on the dual legitimation imperatives with which the network actors had to contend as they negotiated their way to a consensus on a politically acceptable regulatory structure for payday lending. This consensus has proved to be politically vulnerable because of the continuing normative conflicts embedded in official financial policy discourse, and inter alia, in the legitimation imperatives which have permeated the policy-making process.Ph