This past week marked the first full week of committee hearings during the “second half” of the 2020 legislative session. The IMBA saw legislative activity on several bills of importance, including committee action on HB 1109 to which the IMBA testified in support. Legislative committees have two weeks to move bills that were assigned from the first half of session. Bills that passed the Senate are now in the House and vice versa. The IMBA will continue to monitor bills as they are scheduled for committee hearings and will monitor amendments that are filed to make additional changes.
BILLS TO WATCH
SB 327 – Reporting of Consumer Loans by Unlicensed Lenders
Sen. Andy Zay (R-Huntington)
Rep. Martin Carbaugh (R-Fort Wayne)
Why it matters
The bill requires the reporting of base-level consumer loan information to a private reporting agency approved by the Department of Financial Institutions under Chapter 7 (the payday lending section of the code). There is currently only one vendor approved by the department under Chapter 7. The requirement would apply to all lenders, both domiciled in state and out-of-state. Per IMBA conversations about the bill, this was an unintended consequence of the drafting of the bill. The IMBA was concerned about the new burdens this bill placed on lenders. Sen. Zay worked with the IMBA to clarify that the bill does not apply to depositories.
The bill has been scheduled for a hearing in the House Financial Institutions Committee on Feb. 18.
SB 395 – Uniform Consumer Credit Code
Sen. Eric Bassler (R-Washington)
Rep. Woody Burton (R-Whiteland)
Why it matters
This bill originated from recommendations made by the Financial Institutions Study Committee last summer. The IMBA provided suggested changes to the Uniform Consumer Credit Code for purposes of reforming the antiquated uniform law. However, the bill was amended in the Senate Insurance and Financial Institutions Committee with several significant changes. Most notably, the bill still attempts to fix the problematic refundable calculation of the prepaid/origination fee by establishing a flat origination fee/prepaid finance charge of no more than $75 for a consumer loan under $2,000, $150 for a consumer loan between $2,000 and $4,000, and $250 for a consumer loan over $4,000. The bill also raised the state usury rate from 25% to 36% but was amended to keep the rate at 25%. The bill was amended to remove several provisions about which the IMBA expressed concern, but still contains several items that are in need of additional work. The IMBA is continuing to work on addressing those issues.
The bill has been scheduled for a hearing in the House Financial Institution Committee on Feb. 18.
SB 408 – Various Tax Matters
Sen. Travis Holdman (R-Markle)
Rep. Tim Brown (R-Crawfordsville)
Why It Matters
The bill is the annual Department of Revenue legislation and makes various changes to Indiana’s tax code. Notably, the bill clarifies the treatment of factored receivables under the FIT. The IMBA monitors this bill every session for changes to Indiana’s tax code as it relates to financial institutions.
The bill has been referred to the House Ways and Means Committee and is awaiting a hearing.
HB 1109 – Telephone Solicitation and Consumer Credit
Rep. Matt Lehman (R-Berne)
Sen. Greg Walker (R-Columbus)
Why it matters
The IMBA supports HB 1109 as this legislation fixes two issues from the passage of last session’s HEA 1123 and HEA 1668. HEA 1123 inadvertently expanded the registration requirement for telephone solicitation to any business in the state of Indiana using the telephone to solicit business. The registration requirement is burdensome and comes with private right of action if not implemented properly. The IMBA sought this clarification to ensure financial institutions are not required to register with the attorney general’s office.
Additionally, the IMBA worked with lawmakers to amend HB 1109 to fix the issue lenders are dealing with when trying to pull a credit report on a customer and are returned an error message because of misinformation. HEA 1668, which passed in 2019, changed this process and took away the ability from lenders to do their own customer due diligence.
The bill was heard in the Senate Utilities Committee on Feb. 13 and was voted out unanimously.