STAND. COM. REP. NO.638

Honolulu, Hawaii

, 2001

RE: S.B. No. 1333

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 1333 entitled:

"A BILL FOR AN ACT RELATING TO FINANCIAL SERVICES LOAN COMPANIES,"

begs leave to report as follows:

The purpose of this measure is to authorize the assessment of additional fees and charges by financial services loan companies in consumer loan transactions.

The Commissioner of Financial Institutions (Commissioner) testified in opposition to this measure.

This measure authorizes financial services loan companies to charge consumers:

(1) Administrative fees of up to $75 on loans not secured by real estate with precomputed interest rates;

(2) Prepayment penalty fees on variable rate loans and open-end loans; and

(3) Check collection fees.

Your Committee finds that consideration of this measure may be premature in view of ongoing efforts to redraft article 9 of the Code of Financial Institutions relating to financial services loan companies. In 1996, a task force was convened to redraft article 9 of the Code to parallel other articles in the Code, and to implement provisions that balanced the specific needs of the industry and consumer protection. This task force, which included the Commissioner and representatives of the financial services loan industry, prepared a discussion draft for review by the industry. A lack of feedback caused the task force's work to come to a standstill, and only recently has the task force resumed discussions on the draft.

Your Committee further finds that task force members have expressed a willingness to continue discussion on the remaining unresolved issues and have indicated that an agreement on a draft may be forthcoming before the end of the legislative session. Therefore, in order to maintain a legislative vehicle for proposed revisions to article 9 of the Code, your Committee has amended this measure by inserting an effective date of July 1, 2050. Your Committee has also amended this measure to reflect preferred drafting style.

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 S.B. No. 1333, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1333, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair