LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6946 NOTE PREPARED: Jan 24, 2022
BILL NUMBER: SB 352 BILL AMENDED: Jan 20, 2022
SUBJECT: Supervised Consumer Loans.
FIRST AUTHOR: Sen. Zay BILL STATUS: 2
nd
Reading - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill amends the Uniform Consumer Credit Code to provide that the
authorized loan finance charge for a consumer loan, other than a supervised loan, that is entered into after
June 30, 2022, may not exceed 36% (versus 25% for a consumer loan that is entered into before July 1, 2022)
per year on the unpaid balances of the principal.
It amends the definition of "supervised loan" to mean a consumer loan that:
(1) is entered into before July 1, 2022, and with respect to which the rate of the loan finance charge exceeds
the authorized 25% annual rate for consumer loans under current law; or
(2) is entered into after June 30, 2022, and is made in accordance with the requirements for supervised loans
set forth in the bill.
It sets forth requirements and limitations with respect to the following for supervised loans made after June
30, 2022:
(1) Authorized fees and charges.
(2) The maximum principal amount.
(3) The minimum and maximum lengths of the loan term.
(4) Information and disclosures to be included in the loan contract.
(5) A borrower's right to rescind a supervised loan transaction.
It provides that when a borrower enters into a supervised loan, the lender shall provide the borrower with a
pamphlet approved by the Department of Financial Institutions (DFI) that describes:
(1) the availability of debt management and credit counseling services;
(2) the borrower's rights and responsibilities; and
SB 352 1 (3) the availability of the 211 telephone dialing code for human services information and referrals.
It sets forth prohibited acts and practices in connection with a supervised loan. It provides that a lender may
not take a security interest in real or personal property in connection with a supervised loan, other than a
security interest in a personal check of the borrower.
It specifies the applicability of the bill's provisions to supervised loans made by persons exempt from:
(1) the bill's finance charge limitations; and
(2) licensure by the DFI.
It requires a lender that makes at least one supervised loan in Indiana during a calendar year to remit to the
department:
1) an annual fee of $250; and
(2) an additional fee of $250 per Indiana branch location (after the first location).
It establishes the Consumer Financial Education Fund (fund), and provides that the annual fees collected
from lenders making supervised loans are to be deposited in the fund.
It provides that the fund is to be:
(1) administered by the DFI; and
(2) used by the DFI for paying expenses relating to consumer financial education.
It requires a person that enters into at least one supervised loan transaction in Indiana in any calendar year
to file with the DFI a report concerning the person's business and operations with respect to that calendar
year.
It requires the director of the DFI to prescribe:
(1) the time and manner for filing the report; and
(2) the information to be included in the report.
It requires the DFI to publish and make available to the public, at least annually, an analysis of the
information provided in the reports filed with the DFI. It sets forth the information that must be included in
the DFI's analysis. It also makes conforming amendments to existing references to supervised loans
throughout the Indiana Code.
Effective Date: July 1, 2022.
Explanation of State Expenditures: This bill will increase the workload of the Department of Financial
Institutions (DFI) to regulate changes made to supervised loans as well as provide an annual report required
by the bill. Increases in workload could be offset with the collection of annual licensure fees collected from
supervised loan providers.
Supervised loans made in compliance of the provisions within the bill are exempt from loansharking under
IC 35-45-7. If there are less convictions of loansharking, the state will see a potential decrease in level 6
felonies, which are punishable by a prison term ranging from 6 to 30 months, with an advisory sentence of
1 year. However, any decrease in expenditures are likely to be small.
Explanation of State Revenues: Summary - This bill is expected to increase revenue to the newly created
SB 352 2 Consumer Financial Education Fund (CFE Fund) from annual licensing fees paid by financial institutions
who offer supervised loans. The bill could increase General Fund revenue from civil penalties collected from
Uniform Consumer Credit Code violations.
The bill could also impact revenue distributions to the General Fund and State User Fee Fund from a change
in the number of civil actions filed in the state. The bill’s net impact on state revenue from civil court filing
fees is indeterminable.
Penalty Provision: If less court cases occur and fines are collected, revenue would decrease to both the
Common School Fund (from criminal fines) and the state General Fund (from court fees) would increase.
The maximum fine for a Level 6 felony is $10,000. However, any additional revenues would likely be small.
Additional Information -
Change in Interest Rates: Increasing the maximum allowable annual interest rate for loans could decrease
current DFI enforcement actions taken against financial institutions who charge interest rates in excess of
25%. As a result, revenue to the General Fund from civil penalties collected from violators could decrease.
Current law allows the DFI to file civil actions against financial institutions who violate provisions of the
Uniform Consumer Credit Code, where a maximum civil penalty of $5,000 or $10,000 can be collected per
violation, depending on mitigating and aggravating circumstances.
Supervised Loans: The bill requires supervised loan providers to annually register with the DFI. Each
provider is to pay an annual $250 licensure fee as well as a $250 fee for each branch location maintained by
the loan provider. Revenue received from these fees is deposited in the newly created CFE Fund. Annual
increases in revenue to the CFE Fund from licensure fees is currently unknown. An information request with
the DFI is currently pending. As this information is provided, this fiscal note will be updated.
Consumer Financial Education Fund: The CFE Fund is established to fund DFI’s regulation of supervised
loans in the state. Money in the fund is nonreverting and continually appropriated to the DFI for purposes
of providing oversight of supervised loans in the state.
Enforcement: To the extent supervised loan providers violate regulations contained in the bill, the DFI could
potentially bring civil actions against violators. As a result, state revenue could increase from civil court fees
and civil penalties paid by individuals who violate Uniform Consumer Credit Code. A civil costs fee of $100
would be assessed when a civil case is filed. If additional civil actions occur and court fees are collected,
revenue to the state General Fund may increase. A portion of the fee revenue is deposited into the State User
Fee Fund. Additional fees may be collected at the discretion of the judge and depending upon the particular
type of case.
Explanation of Local Expenditures:
Explanation of Local Revenues: Court Fee Revenue: If additional civil actions occur and court fees are
collected, local governments would receive additional revenue from both a portion of the civil costs fee and
other fees that would be collected.
Penalty Provision: If less court actions occur and a guilty verdict is entered, local governments would receive
less revenue from court fees. However, the amounts would likely be small.
SB 352 3 State Agencies Affected: DFI; Department of Correction.
Local Agencies Affected: Trial courts, city and town courts.
Information Sources: Lyndsey Miller, DFI.
Fiscal Analyst: Matthew Leahy, 317-234-9485.
SB 352 4