10VAC5-200 Payday Lending

REGULATIONS

Vol. 27 Iss. 24 - August 01, 2011

TITLE 10. FINANCE AND FINANCIAL INSTITUTIONS

STATE CORPORATION COMMISSION

Chapter 200

Proposed Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Title of Regulation: 10VAC5-200. Payday Lending (amending 10VAC5-200-90).

Statutory Authority: §§ 6.2-1814 and 12.1-13 of the Code of Virginia.

Public Hearing Information: A public hearing will be scheduled upon request.

Public Comment Deadline: August 15, 2011.

Agency Contact: Gerald Fallen, Deputy Commissioner, Bureau of Financial Institutions, State Corporation Commission, P.O. Box 640, Richmond, VA 23218, telephone [phone], FAX [phone], or email [e-mail].

Summary:

The State Corporation Commission is proposing amendments to 10VAC5-200-90, which prescribes the schedule of annual fees to be paid by payday lenders licensed under Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia. The amendments increase the annual fee to $500 per office plus $0.47 per payday loan made by each licensee. The amendments also update references to the Code of Virginia.

AT RICHMOND, JULY 12, 2011

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. BFI-2011-00085

Ex Parte: In re: annual fees paid
by licensed payday lenders

ORDER TO TAKE NOTICE

Section 6.2-1814 of the Code of Virginia authorizes the State Corporation Commission ("Commission") to adopt a schedule of annual fees to be paid by licensed payday lenders ("licensees") to defray the costs of their examination, supervision, and regulation. The schedule is required to bear a reasonable relationship to the business volume of licensees, the actual costs of their examinations, and to other factors relating to their supervision and regulation. The Commission's schedule of annual fees is prescribed in 10 VAC 5-200-90 of the Virginia Administrative Code.

Over the past few years, there have been significant declines in the total number of licensees, the total number of offices maintained by licensees, and the total number of payday loans made by licensees. According to the most recent annual report published by the Bureau of Financial Institutions ("Bureau"), 31 licensees operated 288 offices and made 435,273 payday loans in 2010. By comparison, 84 licensees operated 832 offices and made 3,537,395 payday loans in 2007. While the Bureau's direct examination expenses have consequently decreased in part, such expenses represent only a portion of the total costs incurred by the Bureau in examining, supervising, and regulating licensees. A large percentage of the Bureau's costs are fixed overhead expenses as well as salaries and benefits for supervisors and support staff, which are unaffected by the contraction of the industry but must nevertheless be recovered through the annual assessment. Moreover, examinations of licensees have become more complex and time consuming as a result of the extensive statutory and regulatory amendments that went into effect on January 1, 2009. Since the annual assessment calculation is based on the number of offices operated by licensees and the number of loans made by licensees, both of which have markedly declined in recent years, the total assessment generated by 10 VAC 5-200-90 has become inadequate. Therefore, the Bureau has now submitted to the Commission proposed amendments to 10 VAC 5-200-90 in order to better recover the sums necessary to examine, supervise, and regulate licensees.

NOW THE COMMISSION, based on the information supplied by the Bureau, is of the opinion and finds that the proposed regulation should be considered for adoption.

Accordingly, IT IS ORDERED THAT:

(1) The proposed regulation is appended hereto and made a part of the record herein.

(2) Comments or requests for a hearing on the proposed regulation must be submitted in writing to Joel H. Peck, Clerk, State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218, on or before August 15, 2011. Requests for a hearing shall state why a hearing is necessary and why the issues cannot be adequately addressed in written comments. All correspondence shall contain a reference to Case No. BFI-2011-00085. Interested persons desiring to submit comments or request a hearing electronically may do so by following the instructions available at the Commission's website: http://www.scc.virginia.gov/case.

(3) This Order and the attached proposed regulation shall be posted on the Commission's website at http://www.scc.virginia.gov/case.

(4) The Commission's Division of Information Resources shall send a copy of this Order, including a copy of the attached proposed regulation, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

AN ATTESTED COPY hereof, together with a copy of the proposed regulation, shall be sent by the Clerk of the Commission to the Commission's Office of General Counsel and the Commissioner of Financial Institutions, who shall send a copy of this Order, together with a copy of the proposed regulation, to all licensed payday lenders as well as other interested parties designated by the Bureau.

10VAC5-200-90. Schedule of annual fees for the examination, supervision, and regulation of payday lenders.

Pursuant to § 6.1-457 6.2-1814 of the Code of Virginia, the commission sets the following schedule of annual fees to be paid by payday lenders required to be licensed under Chapter 18 (§ 6.1-444 et seq.) of Title 6.1 (§ 6.2-1800 et seq.) of Title 6.2 of the Code of Virginia. Such fees are to defray the costs of the examination, supervision, and regulation of such lenders licensees by the Bureau of Financial Institutions bureau. The fees are related to the actual costs of the bureau, to the number of offices operated by the lenders licensees, to the volume of business of the lenders licensees, and to other factors relating to their supervision and regulation.

The annual fee shall be $300 $500 per office, authorized and opened, as of December 31, plus $.18 $.47 per payday loan made by each licensee. The annual fee for each payday lender shall be computed on the basis of (i) the number of offices operated authorized and opened as of December 31 of the year preceding the year of the assessment, and (ii) the number of payday loans as defined in § 6.1-444 of the Code of Virginia made under Chapter 18 (§ 62.1-1800 et seq.) of Title 6.2 of the Code of Virginia during the calendar year preceding the year of the assessment.

Fees shall be assessed on or before September 15 for the current calendar year. By law the fee must The assessment shall be paid by licensees on or before October 15.

The annual report, due March 25 each year, of each licensee provides the basis for its assessment, (i.e., the number of offices and payday loans made). In cases where a license has been granted between January 1 and September 15 of the year of the assessment, the licensee shall pay $150 $250 per office, authorized and opened, as of September 15 of that year.

Fees prescribed and assessed by pursuant to this schedule are apart from, and do not include, the reimbursement for expenses permitted authorized by subsection B of § 6.1-457 6.2-1814 of the Code of Virginia.

VA.R. Doc. No. R11-2918; Filed July 12, 2011, 10:37 a.m.