Nova Scotia's Utility and Review Board has started a series of hearings into payday loan regulations in the province.

The hearings will examine everything from the cost of borrowing to the cost of defaulting on loans.

David Roberts, a consumer advocate, argued the charge of $25 — per $100 borrowed — needs to be lower. He said it should be between $17 and $23, which are rates available in other provinces.

Peter Gurnham and Roland Deveau, who sit on the Utility and Review Board, both stated that when the board set the rate of borrowing at $25 per $100 borrowed, the $25 fee was meant to be a maximum cap. The board expected to see competition among payday lenders to offer lower rates.

In research presented to the board, an economic consultant showed that almost all stores charge the maximum price, without much price competition.

"Obviously that's not happening, in fact everybody's moving to the top," said Roberts. "The role of the regulator is to move it down and relieve pressure or burdens on the borrowers."

'They get into a cycle'

Gordon Arsenault, with the Credit Counselling Services of Atlantic Canada, said his service sees a problem with repeated use of loans.

Many clients fall into a cycle of borrowing, getting paid — then borrowing again.

"They get into a cycle where they just can't get out of it," said Arsenault. He adds many clients also resort to taking out multiple loans from different shops, using one shop's loan to pay another shop.

The counselling service would like to see a loan registry, so there could be some restraints on multiple borrowers.

"If we can stem the total number of payday loans that a consumer would be required to carry, I think it would be a lot easier for people in Nova Scotia," Arsenault said.

Second hearing tonight

Norm Bishop, the secretary of the Canadian Payday Loan Association, said such a registry would be costly and difficult to implement. Bishop also said he felt to focus on payday loans means not taking the full picture into account.

"It's important to look at how many credit cards they have, how many other types of credit they've got that are causing them difficulty," he said.

"You get the impression it's just payday loans. Well, no, they have payday loans because they have other credit difficulties as well."

The Canadian Payday Loan Association is arguing the regulations should not see substantial changes, as putting more restrictions on licensed lenders would nudge consumers towards unlicensed internet lenders.

"It's a concern for our members, because it's a competitive issue," said Bishop.

"It's certainly not protecting consumers as well."

The second public hearing will happen tonight at 7 p.m. in the Utility and Review Board offices at Summit Place. The board has approximately three months to deliver its decision.