HSB 243

The bill exempts the following persons from the requirements of the bill: a person who does business under any law relating to banks, savings banks, trusts, savings and loan associations, profit sharing and pension trusts, credit unions, insurance companies, or receiverships, a person who is not regularly engaged in the business of making small dollar installment loans, as defined in the bill, a person who is licensed pursuant to another Iowa Code chapter to the extent that the person’s activities are governed by that Code chapter, or a consumer loan with a finance charge as permitted under specified law. _____ physically located in the state and is licensed pursuant to the bill. The bill requires an application for a license to include an application fee of $100 and a surety bond, as described in the bill. The superintendent of banking shall issue a license pursuant to the bill if the superintendent finds all of the following: the experience, character, and general fitness of the applicant is such as to warrant a finding that the applicant will conduct the small dollar installment loan business honestly, fairly, and efficiently; the applicant has not been convicted of a felony; the applicant is financially responsible; and the applicant has unencumbered assets of at least $25,000 available for operating the business. The superintendent shall approve or deny an application for a license by written order within days of filing. The bill requires a license issued pursuant to the bill to be conspicuously posted at the licensee’s place of business. A license is valid until the next succeeding January 1, unless earlier suspended or revoked. The bill provides that a license shall be renewed annually by filing a renewal application with the superintendent on or before December 1. The superintendent may assess a late fee of $10 per day for a late renewal application. The bill allows the superintendent to license applicants through a nationwide licensing system and to use such system as a channeling agent with the federal government. The bill provides that a licensee may surrender a license by delivering written notice to the superintendent. The surrender shall not affect the licensee’s criminal or civil liability for acts committed prior to the surrender, the liability of the surety bond, or payment of the annual license fee. The superintendent may establish procedures for the disposition of the surrendered licensee’s books, accounts, and records and may require any action necessary for the protection of outstanding makers of checks. _____ in writing within days upon any of the following: filing for bankruptcy or reorganization; reorganization of the business; commencement of license revocation or any other civil or criminal proceedings by any other state or jurisdiction; the filing of a criminal indictment or complaint against the licensee or any other specified persons; or a felony conviction against the licensee or any other specified persons. The bill requires prior written approval of the superintendent for the continued operation of a small dollar installment loan business whenever a change in control of a licensee is proposed, as described in the bill. The person requesting such approval shall pay a $100 fee to the superintendent, as well as any costs incurred by the superintendent in investigating a change in control request. A license issued pursuant to the bill is not transferable or assignable. The bill provides that a licensee may operate a small dollar installment loan business only at its designated principal place of business, where the licensee shall maintain its books, accounts, and records. A licensee may change the location of its principal place of business with the prior written approval of the superintendent. A licensee may establish branch offices in the same county in which the principal place of business is located, with the prior written approval of the superintendent. A licensee shall notify the superintendent days in advance of a change in the name of the licensee. A licensee shall pay a $25 fee to the superintendent for a request to change the location of a principal place of business, to establish a branch office, or to provide notice of a name change. _____ to enable the concealment of acts engaged in to evade the requirements of the bill. The bill requires the superintendent to examine the books, accounts, and records of each licensee at least once a year and as needed to secure information required by the bill and to determine whether any violations of the bill have occurred. The licensee shall pay the cost of the examination. The superintendent may also examine or investigate complaints or reports concerning alleged violations of the bill, and may order the actual cost of the examination or investigation as specified in the bill be paid by the person subject to such examination or investigation. Failure to pay the examination or investigation fee within days of receipt of demand shall subject the licensee to a late fee of up to percent of the amount of the fee for each day the payment is delinquent. The superintendent may disclose information to other state or federal regulatory authorities and may receive documents, materials, or other information through a nationwide licensing system and from other regulatory agencies, as provided in the bill. The bill permits the superintendent to take disciplinary action against a licensee, after notice and hearing, if the superintendent finds any of the following: the licensee or any other specified person has violated any provision of the bill, any rule adopted by the superintendent, or any other applicable state or federal law; the licensee has failed to pay a license fee or to maintain in effect the required surety bond; a fact or condition existing which would have resulted in the initial denial of issuance of a license; the licensee has abandoned its place of business for days or more; or the licensee fails to pay an administrative penalty or the cost of investigation as ordered. _____ in an amount not to exceed $5,000 per violation; issue a citation and warning; or order the licensee to pay restitution. The superintendent may also order an emergency suspension of a license as provided in the bill. The bill provides that a license shall not be revoked or suspended except after notice and a hearing. The bill permits the superintendent to issue a cease and desist order on any person the superintendent believes is engaged in or is about to engage in a violation of the bill or any rule or order issued by the superintendent. The bill provides procedures for notice and hearing for the issuance of a cease and desist order, as provided in the bill. After notice and hearing, if so requested or ordered, the superintendent shall affirm, vacate, or modify the order. The superintendent may vacate or modify an order if conditions which caused its entry have changed or if it is otherwise in the public interest to do so. The bill also permits the attorney general to initiate action in district court if it appears a person has engaged in or will engage in a violation of the bill, as provided in the bill. The bill provides that a person who operates a small dollar installment loan business in the state without first obtaining a license or while such license is suspended or revoked is guilty of a serious misdemeanor. A serious misdemeanor is punishable by confinement for no more than one year and a fine of at least $315 but not more than $1,875. In addition, the superintendent may commence an action to enjoin the operation of the business. The bill provides that the revocation, suspension, surrender, cancellation, or alteration of a license will not impair or affect the validity of a preexisting small dollar installment loan or the ability of a lender to service a preexisting loan outside of this state. _____ a small dollar installment loan and requires a licensee to comply with the advertising requirements in the federal Truth in Lending Act. §987(b). Before a licensee may provide a small dollar installment loan, the consumer must sign a statement attesting to whether or not the consumer is a military member or dependent. §987 is void and its terms and conditions unenforceable. The bill requires a licensee to comply with the disclosure requirements in the federal Truth in Lending Act. A licensee must display a disclosure sign, as described in the bill, at each desk in the licensed office and each licensed branch office and on the licensee’s internet site if the licensee provides electronic small dollar installment loans. A licensee who fails to do so is subject to a civil penalty not to exceed $300 for each violation.5 percent of any amount in excess of $500 loaned. The finance charge shall be deemed fully earned as of the date of the loan transaction and shall not be refundable or prorated in the event of prepayment. A licensee is not permitted to compound a finance charge. In addition to a finance charge, a licensee may collect a monthly maintenance fee, a delinquency charge, court costs and reasonable attorney fees, and a dishonored check service fee, as described in the bill. A licensee is prohibited from collecting any other charges or fees in connection with conducting small dollar installment loan transactions.