It only launched last month, but TD Bank and Canada Post have already put a new program offering loans for customers in remote communities on pause, citing unspecified “processing issues.”
Known as the MyMoney program, the mail carrier and lender announced just last month that 6,000 Canada Post locations across the country would soon be able to offer individuals small loans of between $1,000 and $30,000.
Targeting remote communities that lack full service bank branches but do have Canada Post locations, the program was an example of what’s known as postal banking — a system that countries such as Italy, Brazil, New Zealand, Switzerland and others have, to varying degrees of success, but one that hasn’t existed in Canada in more than 50 years.
While customers would apply either in person or online via Canada Post, the loans themselves would be with TD Bank, and come with rates of up to 20 per cent per year — much higher than many other traditional lines of credit, but less than what instalment and payday lenders tend to charge in communities without full-service bank facilities.
At the time, TD said it planned to expand the program to even more banking services, but after barely a month, CBC News has learned that the lender has put the program on temporary hiatus.
“Since the launch, the product was paused both online and in physical locations, after experiencing processing issues,” the bank said, without elaborating. “We’re still working through this and will update accordingly.”
The website where Canadians can apply for the loans has an advisory that the loans are “temporarily unavailable.”
Duff Conacher, co-founder of civic advocacy group Democracy Watch, supports the concept of postal banking generally, but was underwhelmed when he heard the details of the program.
“It’s gouging on the top end,” he said in an interview. “A line of credit should be around 10 to 12 per cent right now, unless it’s tied to a mortgage and then it should be lower.”
“There’s no reason to go above that.”
CBC News has asked TD Bank for more details on what sort of “processing issues” led to the decision — and what the status of existing applications is — but so far the lender has declined to elaborate.