Installment Loans

TRANSFER OF INDUSTRIAL LOAN PROGRAM TO THE DEPARTMENT

Governor Kemp signed Senate Bill 462 into law on June 30, 2020, and it went into effect on July 1, 2020.  The bill was introduced by Senator John Kennedy and sponsored in the House by Representative Bruce Williamson.  The bill transfers the regulation of consumer installment loans of $3,000 or less (“installment loans”) from the Office of the Insurance Commissioner to the Department of Banking and Finance (“Department”).

The Department appreciates the faith placed in it by the Governor and the General Assembly in transferring the regulation of these consumer loans to the Department.  The Department is also grateful for the trust shown by both the industry and the consumer advocates in actively supporting the transfer.  In the regulation of non-depository financial institutions, the Department is directed to ensure that licensees operate in compliance with state law, consumer interests are protected, and economic and technological progress takes place in the industry.  It is the Department’s view that all of these objectives can be obtained if industry, consumer advocates, and the Department are willing to work together to modernize the applicable regulations and the offering of these loans within the State.  Everyone at the Department is excited about regulating a new industry and looks forward to partnering with the interested parties to meet the challenge of successfully transferring the program.

The primary motivation in transferring the regulation of installment loans to the Department was to obtain efficiencies in the regulation of the industry and, as a result, the bill makes numerous statutory changes. At a high-level, the bill does not change the general operations of the industry such as the permissible interest rate and charges, the loan cap, or the taxation rate on interest.  Instead, it changes the regulatory and administrative processes that apply to the industry.  Generally speaking, the bill overlays the regulatory processes that apply to the other non-depository businesses licensed by the Department – residential mortgage businesses and money service businesses- and applies them to the installment lending business. 

Some of the most significant revisions are:

  1. Utilizing the Nationwide Multistate Licensing System and Registry (“NMLS”) for the receipt and processing of applications;
  2. Accepting electronic payments of fees and taxes as well as supporting documentation;
  3. Increasing the reporting of information by licensees to the Department;
  4. Eliminating the requirement that each location of an entity have a separate license; and
  5. Providing that the Department shall conduct examinations on a maximum interval of five years.

The Department strongly encourages every regulated entity to review the bill to ensure a thorough understanding of all the applicable revisions.  Senate Bill 462 can be viewed at: http://www.legis.ga.gov/Legislation/20192020/194666.pdf .

There will obviously be a transition period in moving the regulation of installment loans to the Department, but the Department’s goal is to fully integrate the program as soon as possible.  In order to be transparent with this conversion process, I would like to highlight some of the key steps the Department intends on taking in the near future to fully implement the provisions of Senate Bill 462.

  • The second quarter of 2020 installment lender tax payments are due on July 20, 2020.  The Department’s electronic payment portal to accept these payments and associated returns will not be operational on that date.  However, the Office of the Insurance Commissioner has graciously agreed to accept associated electronic payments and documents through its portal for this tax period.  Please remit payments and related reports utilizing the Office of Insurance Commissioner’s forms through this portal.  In the event a licensee does not wish to remit payments electronically, then the return and payment utilizing the form from the Insurance Commissioner’s Office can be mailed to the Georgia Department of Insurance, Post Office Box 935138, Atlanta, Georgia 31193.  Alternatively, the return can be remitted through the portal and payment delivered via overnight courier to Wells Fargo, Industrial Loan Division, Lockbox # 935138, 3585 Atlanta Avenue, Hapeville, Georgia 30354.  After the second quarter of 2020 tax period, it is the intent of the Department to have all future tax payments due and payable solely on a bi-annual basis through an electronic portal established by the Department.  Additional information on this process will be provided in the future.  No payments for installment lender tax periods starting on July 1, 2020 or later should be remitted until this additional information is provided.

 

  • The entity that administers NMLS has indicated that licensees can start the process of transitioning their license information to the NMLS on or about September 1, 2020.  Once NMLS is updated to accept Georgia specific information, all licensees will need to input company specific data in NMLS prior to October 15, 2020 in order to have a streamlined renewal process starting on November 1, 2020.  However, if a licensee wishes to submit any application to the Department for approval of an activity after the go-live date of NMLS, then the licensee’s information must be inputted and the application submitted through NMLS at that time.  Any application that is required to be filed with the Department prior to NMLS’ go-live date can be submitted to the Department on the forms previously utilized by the Insurance Commissioner’s office with any additional information required by SB462.  Additional information on transitioning to NMLS will be made available when the system is live.

 

  • The Department intends on issuing proposed rules and regulations no later than July 31, 2020, to, among other items, implement some of the statutory changes contained in Senate Bill 462.  The proposed rules will be made available on the Department’s website as soon as they are issued.  If you wish to receive a copy of the proposed rules when they are issued, then please email Sharelle Hill at shill@dbf.state.ga.us and request to be included on the Department’s rulemaking list.  Alternatively, you can subscribe directly to the list from the “Stay Connected” section of the Department’s homepage at https://dbf.georgia.gov . 

The Department will work with the industry in this interim period to continue to allow it to offer installment loans to Georgia consumers in an efficient manner that protects consumer interests.  If there are any questions or concerns related to implementation during this interim period, please do not hesitate to contact dbfgila@dbf.state.ga.us.  Your inquiry will be responded to in a timely manner.

This is a very exciting time for the Department.  We look forward to being exposed to a new industry and to tackling any challenges that arise in this process in order to fully achieve the goals of the legislation.

KEVIN B. HAGLER

Commissioner