It only launched last month, but TD Bank and Canada Post have already paused a new program offering loans to customers in remote communities, citing unspecified “processing issues”.
Known as the MyMoney program, the postman and lender announced last month that 6,000 Canada Post outlets across the country will soon be able to offer individuals small loans ranging from $1,000 to $30,000.
Targeting remote communities that do not have full-service bank branches but do have Canada Post offices, the program was an example of what is known as postal banking – a system that countries like Italy, Brazil, New Zealand, Switzerland and others have had varying degrees of success, but that hasn’t existed in Canada for over 50 years.
While customers would apply in person or online through Canada Post, the loans themselves would be with TD Bank and carry rates of up to 20% per annum – much higher than many other lines of credit. traditional, but less than what installment and payday lenders tend to charge in communities without full banking services.
At the time, TD said it planned to expand the program to even more banking services, but after just a month CBC News learned that the lender had temporarily suspended the program.
“Since launch, the product has been paused both online and in physical locations, after experiencing processing issues,” the bank said, without giving further details. “We are still working through this and will update accordingly.”
The website where Canadians can apply for the loans contains a notice that the loans are “temporarily unavailable”.
Duff Conacher, co-founder of civic advocacy group Democracy Watch, supports the postal banking concept in general, but was disappointed when he heard details of the program.
“It’s abusive on the high end,” he said in an interview. “A line of credit should be around 10-12% right now, unless it’s tied to a mortgage, and then it should be lower.”
“There is no reason to go beyond that.”
CBC News has asked TD Bank for more details about the type of “processing issues” that led to the decision – and the status of existing applications – but so far the lender has declined to give details. .