Places a moratorium on licensing of new deferred presentment and small loan institutions in the state
Impact
The implementation of HB 685 is expected to significantly affect the landscape of financial services within the state. By halting the licensing of new small loan institutions, the bill aims to curb the growth of products that may lead to excessive consumer debt and financial instability. It shifts the focus towards existing licensed entities, potentially providing a reassessment of their operations and impacts on Louisianans. The moratorium may also spur discussions on the need for stronger consumer protections in the lending market, especially concerning predatory lending practices.
Summary
House Bill 685, introduced by Representative Barrow, establishes a moratorium on the licensing of new deferred presentment transactions and small loan institutions in Louisiana. Effective from August 1, 2014, the bill prohibits the Office of Financial Institutions and its commissioner from issuing new licenses for these entities. However, it allows for the renewal of existing licenses held prior to this date. This legislative move aims to address potential issues related to the proliferation of small loan services which have been criticized for their impact on consumer debt levels.
Sentiment
The sentiment surrounding HB 685 appears to be mixed. Supporters of the bill argue that it is a necessary step in protecting consumers from high-interest rates and debt traps associated with deferred presentment transactions and small loans. On the other hand, critics may contend that the bill restricts access to much-needed financial services for individuals who might rely on these loans for emergency expenses. The discussion around the bill has highlighted tensions between consumer protection and the availability of financial options.
Contention
Notable points of contention revolve around the implications of the moratorium on future financial services. Advocates for the bill stress the need for greater regulation of the lending industry to protect vulnerable consumers from predatory lending practices. In contrast, opponents raise concerns about limiting access to credit, which some argue is essential for individuals with limited financial means. This debate indicates an ongoing struggle to balance consumer protection with the need for accessible financial resources, making this issue a significant focus for legislators and stakeholders in Louisiana.
Requires the commissioner of the office of financial institutions to compile certain information from licensees under the Louisiana Deferred Presentment and Small Loan Act. (8/1/12)