STAND. COM. REP. NO. 1068

Honolulu, Hawaii

RE: S.B. No. 537

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 537, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONSUMER PROTECTION,"

begs leave to report as follows:

The purpose and intent of this measure is to repeal and replace requirements applicable to deferred deposit transactions with requirements applicable to small dollar loan transactions, and to require licensing for small dollar lenders.

This measure also appropriates funds out of the compliance resolution fund for two full-time equivalent examiners for the small dollar installment loan program.

Your Committee received written comments in support of this measure from the Department of Commerce and Consumer Affairs, Division of Financial Institutions; Hawaiian Community Assets; Catholic Charities Hawaii; Hawaii Appleseed Center for Law and Economic Justice; and three individuals.

Your Committee received written comments in opposition to this measure from the Money Service Centers of Hawaii, Inc., and Maui Loan Inc.

Your Committee received written comments on this measure from the Office of Information Practices.

Your Committee finds that this measure will encourage transparency and increase consumer protection in the payday lending industry.

Your Committee has amended this measure by:

(1) Changing the appropriation out of the compliance resolution fund to an unspecified amount;

(2) Making numerous technical corrections, including:

(A) Adjusting cross-references to other provisions in the measure and to existing laws;

(B) Completing the definition of "NMLS";

(C) Providing consistency between the preamble and the operative provisions of the measure with regard to the use of terms such as "nonrefundable initial application fee", "monthly maintenance fee", and "renewing the loan"; and

(D) Deleting language in the preamble relating to two-week time periods with regard to loan renewals and early repayments, since these time periods are not reflected in the operative provisions of the measure;

(3) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

(4) Making technical nonsubstantive changes for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 537, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 537, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair