Individual State Agency Fiscal Note — 6025 SB, Predatory loans (Department of Financial Institutions)
Summary
Individual State Agency Fiscal Note for 6025 SB, titled Predatory loans, prepared for the Department of Financial Institutions. For the Financial Services Regulation Account, estimated operating expenditures are 428,281 for 2023-25 and 1,220,258 for 2025-27. The narrative states that the bill revises Chapter 31.04 RCW, the Consumer Loan Act. Section 2 amends the definition of loan, Section 3 adds anti-evasion provisions, and Section 4 makes it a violation for any person to engage in subterfuge or pretense to evade the requirements. Under new rule making, the narrative states that rulemaking costs will be absorbed.
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“Individual State Agency Fiscal Note — 6025 SB, Predatory loans (Department of Financial Institutions).”
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Individual State Agency Fiscal Note
Bill Number: 6025 SB Title: Predatory loans Agency: 102-Department of Financial
Institutions
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
ACCOUNT FY 2024 FY 2025 2023-25 2025-27 2027-29
Financial Services Regulation 355,254 355,254 634,396 634,396
Account-Non-Appropriated 300-6
Total $ 355,254 355,254 634,396 634,396
Estimated Operating Expenditures from:
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 0.0 3.5 1.8 4.6 4.6
Account
Financial Services Regulation 0 428,281 428,281 1,220,258 1,220,258
Account-Non-Appropriated 300
-6
Total $ 0 428,281 428,281 1,220,258 1,220,258
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/26/2024
Agency Preparation: Cale Zimmerman Phone: (360) 902-0507 Date: 01/29/2024
Agency Approval: Emily Fitzgerald Phone: (360) 902-8780 Date: 01/29/2024
OFM Review: Amy Hatfield Phone: (360) 280-7584 Date: 01/29/2024
Form FN (Rev 1/00) 192,348.00 Request # 24-015-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 6025 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Significant provisions of the bill and any related workload or policy assumptions that have revenue or expenditure impact on the responding agency by
section number.
This bill revises Chapter 31.04 RCW, the Consumer Loan Act (CLA). Section 2 amends the definition of “loan.” Section
3 adds anti-evasion provisions to clarify that a person may not engage in subterfuge to evade compliance with the CLA
requirements. Section 3 also sets forth other considerations in determining whether a person making a loan is a lender that
is subject to the CLA. Section 4 adds a new section which makes it a violation of the CLA for any person to engage in any
subterfuge or pretense to evade the requirements of the CLA. Section 5 is amended to state that any non-mortgage
consumer loans made by an unlicensed person are unenforceable.
II. B - Cash receipts Impact
Cash receipts impact of the legislation on the responding agency with the cash receipts provisions identified by section number and when appropriate, the
detail of the revenue sources. Description of the factual basis of the assumptions and the method by which the cash receipts impact is derived. Explanation
of how workload assumptions translate into estimates. Distinguished between one time and ongoing functions.
The Department of Financial Institutions (DFI) estimates that approximately 80 currently unlicensed lenders will need to
become licensed under the Consumer Loan Act (CLA) under the proposed amendments. DFI anticipates newer consumer
credit products or services to require licensure based on the proposed amendment to the definition of “loan.” This includes
products or services offered by online fintech loan companies, such as loans involving future income.
DFI expects to collect about $84,976.80 ($1062.21 x 80) in initial licensing fees during FY25 from the estimated 80
companies.
Licensees under the CLA pay an assessment fee based on their volume of business in the previous year. DFI estimates
the following revenue under the assumption that applicants will pay an assessment of $3,378.47 each year (average
assessment for existing consumer lenders in CY 2022). The first annual assessment fees will be due in early CY 2025 for
business conducted in CY 2024. DFI expects to collect $270,277.60 ($3,378.47 x 80) during FY25 and ongoing.
In addition, each licensee under the CLA is subject to examination. Exam costs will be billed at $69 per hour and each initial
exam will likely require 17 hours. New licensees are examined within the first 12-24 months of licensure. DFI expects to
examine 40 licensees in FY26 and each year following, resulting in $46,920 per year ($69 x 17 x 40).
For purposes of this fiscal note, investigative fees are not included as they are indeterminate.
II. C - Expenditures
Agency expenditures necessary to implement this legislation (or savings resulting from this legislation), with the provisions of the legislation that result in
the expenditures (or savings) identified by section number. Description of the factual basis of the assumptions and the method by which the expenditure
impact is derived. Explanation of how workload assumptions translate into cost estimates. Distinguished between one time and ongoing functions.
DFI will collect financial, criminal background information, and other identifying information for review of suitability for
licensure.
DFI will have authority to examine and investigate each licensee.
DFI will receive, investigate, and resolve complaints.
DFI will have enforcement authority.
Predatory loans 102-Department of Financial Institutions
Form FN (Rev 1/00) 192,348.00 Request # 24-015-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 6025 SB
The costs of conducting these activities are represented by the FTE estimates below:
Program FTEs in FY25:
FTE Position Functional Area
0.1 Management Analyst 5 Licensing
0.2 Management Analyst 3 Licensing
1.0 Management Analyst 3 Exams
0.5 Financial Examiner 3 Exams
0.5 Financial Examiner Supv. Exams
0.2 Program Specialist 2 Enforcement
0.3 Fin. Legal Examiner 3 Enforcement
0.2 Fin. Legal Examiner Supv. Enforcement
3.0 Total Program FTEs
Program FTEs in FY26 and beyond:
FTE Position Functional Area
1.0 Management Analyst 3 Exams
2.0 Financial Examiner 3 Exams
0.5 Financial Examiner Supv. Exams
0.2 Program Specialist 2 Enforcement
0.2 Fin. Legal Examiner 3 Enforcement
0.1 Fin. Legal Examiner Supv. Enforcement
4.0 Total Program FTEs
Administrative overhead is calculated at 15% of program FTEs using a Program Specialist 4 as a representative position,
which comes to $44,076 in FY25 and $62,856 FY26 and beyond.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2024 FY 2025 2023-25 2025-27 2027-29
300-6 Financial Services Non-Appr 0 428,281 428,281 1,220,258 1,220,258
Regulation Account opriated
Total $ 0 428,281 428,281 1,220,258 1,220,258
III. B - Expenditures by Object Or Purpose
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 3.5 1.8 4.6 4.6
A-Salaries and Wages 281,900 281,900 759,330 759,330
B-Employee Benefits 90,048 90,048 264,022 264,022
C-Professional Service Contracts
E-Goods and Other Services 31,033 31,033 83,506 83,506
G-Travel 13,300 13,300 101,400 101,400
J-Capital Outlays 12,000 12,000 12,000 12,000
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 0 428,281 428,281 1,220,258 1,220,258
Predatory loans 102-Department of Financial Institutions
Form FN (Rev 1/00) 192,348.00 Request # 24-015-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 6025 SB
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
Job Classification Salary FY 2024 FY 2025 2023-25 2025-27 2027-29
Financial Examiner 3 95,606 0.5 0.3 2.0 2.0
Financial Examiner Supervisor 122,232 0.5 0.3 0.5 0.5
Financial Legal Examiner 3 91,068 0.3 0.2 0.2 0.2
Financial Legal Examiner Supervisor 122,232 0.2 0.1 0.1 0.1
Management Analyst 3 64,445 1.2 0.6 1.0 1.0
Management Analyst 5 82,515 0.1 0.1
Program Specialist 2 47,994 0.2 0.1 0.2 0.2
Program Specialist 4 67,720 0.5 0.3 0.6 0.6
Total FTEs 3.5 1.8 4.6 4.6
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Acquisition and construction costs not reflected elsewhere on the fiscal note and description of potential financing methods.
NONE
IV. D - Capital FTE Detail: FTEs listed by classification and corresponding annual compensation. Totals agree with total FTEs in Part IVB.
NONE
Part V: New Rule Making Required
Provisions of the bill that require the agency to adopt new administrative rules or repeal/revise existing rules.
Section 3 - The proposed legislation grants the Department the authority to adopt rules as necessary to implement the
provisions of the act. Rulemaking costs will be absorbed.
Predatory loans 102-Department of Financial Institutions
Form FN (Rev 1/00) 192,348.00 Request # 24-015-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 6025 SB
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