STAND. COM. REP. NO.3007
RE: H.B. No. 1778
Honorable Robert Bunda
President of the Senate
Twenty-First State Legislature
Regular Session of 2002
State of Hawaii
Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1778, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICES LOAN COMPANIES,"
The purpose of this measure is to recodify the laws relating to financial services loan companies.
Testimony in support of this measure was received from the Commissioner of Financial Institutions (Commissioner) and the Hawaii Financial Services Association.
This measure repeals article 9 of the code of financial institutions relating to financial services loan companies (FSLCs) and replaces it with two new articles relating to depository FSLCs and nondepository FSLCs, respectively. The proposed new laws, among other things:
(1) Provide depository FSLCs with greater flexibility in their operations, similar to that enjoyed by banks, savings banks, and savings and loan associations;
(2) Establish a 24% usury ceiling on loans made by depository FSLCs, the same as that applicable to banks, savings banks, and savings and loan associations, and a 31.66% annual percentage rate ceiling on certain simple interest loans made by nondepository FSLCs;
(3) Repeal the authority of FSLCs to make precomputed loans, but grandfather in existing precomputed loans;
(4) Limit or prohibit certain fees and charges that may be assessed against consumers; and
(5) Establish recordkeeping and reporting requirements for nondepository FSLCs.
Your Committee has amended this measure by deleting its contents and inserting S.B. No. 2294, S.D. 2, which differs from the House version in the following respects:
(1) The articles are renumbered from 9 to 9A for depository FSLCS and from 9A to 9B for nondepository FSLCS, for clarity;
(2) Quotation marks are placed on the words "finance charge" and "annual percentage rate" in the interest rate section of article 9A and 9B;
(3) A subsection (c) is added to new section 412B-100, to clarify that the power and authority of nondepository financial services loan companies existing on July 1, 2003, shall not be limited or restricted by the enactment of this measure;
(4) The term "precomputed" is added to modify "loan" in subsection (d) of new section 412:9B-100 of the House version; and
(5) Technical, nonsubstantive differences.
Your Committee notes that both versions have the same effective date of July 1, 2050, in order for the affected parties to continue their discussion to come to a consensus on proposed language changes. The amendments made by your Committee to the House version were those deemed necessary by the Commissioner.
As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1778, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1778, H.D. 1, S.D. 1, and be referred to the Committee on Judiciary.
Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,
RON MENOR, Chair