WSR 97-06-092

PROPOSED RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

[Filed March 3, 1997, 4:36 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 96-09-095.

Title of Rule: Fees charged by the Department of Financial Institutions to check cashers and check sellers.

Purpose: To establish fees as allowed by RCW 31.45.050.

Statutory Authority for Adoption: RCW 43.320.040 and 31.45.200.

Statute Being Implemented: RCW 31.45.050.

Summary: Lowers the hourly fee for application review, investigation and examination from $90 per hour to $65 per hour, and establishes an annual assessment fee for licensees.

Reasons Supporting Proposal: In chapter 13, Laws of 1996, the legislature required that the fees charged in the check casher program, including an investigation fee and an annual assessment, cover the costs of operating the program.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Ed Burgert, Program Manager, 300 General Administration Building, Olympia, (360) 902-8727.

Name of Proponent: Department of Financial Institutions, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: In chapter 13, Laws of 1996, the legislature required that the fees charged in the check casher program cover the cost of operating the program. The bill required that the director of the Department of Financial Institutions establish an investigation fee and an annual assessment fee. The rule establishes the annual assessment at $500. The threshold for the application of the annual assessment fee is $1,000,000, so it only applies to large licensees. It also lowers the current investigation fee from $90 per hour to $65 per hour, reflecting the actual cost.

The anticipated effect is that smaller licensees will experience lower examination fees. The implementation of the annual assessment fee allows the program to be self-supporting.

Proposal Changes the Following Existing Rules: (1) Lowers examination fee; and (2) establishes annual assessment fee.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement


Proposed amendments and new sections to chapter 208-630 WAC, the regulations governing check cashers and check sellers.

Background: In 1996, by chapter 13, Laws of 1996, the legislature amended RCW 31.45.050 to require the Department of Financial Institutions' check casher and check seller program to be self-supporting. It states that licensees shall pay an investigation fee and an annual assessment, as set by rule of the director of the Department of Financial Institutions.

The department has involved both regulated entities and their advocates during the process of developing these proposed amendments. A meeting was held prior to the enactment of chapter 13, Laws of 1996, and another informal meeting was held in January 1997, with licensees and their advocates to discuss drafts of the proposed rule changes. As a result, changes were made in this final proposed amendment that mitigate the effect of the fees on small licensees.

The department sent out a questionnaire to all licensees (forty-one companies), asking them to quantify any additional costs resulting from the amendments to the rules or the new rules. We received seven responses. The responses from large licensees showed that they would incur additional costs for the annual assessment fee. Responses from large and small licensees showed a decrease in the cost of examinations.

Summary of Amendments: There are two significant changes: The reduction of the examination fee and the addition of an annual assessment fee.

New WAC 208-630-022 establishes an annual fee of $500 for each license or endorsement (check casher, check seller or small loan endorsement) if the volume of applicable transactions at all licensed locations is in excess of $1,000,000.

New WAC 208-630-023 establishes the fee for examinations at $65 per hour. The rate previously established in WAC 208-630-020 was $90.

Additional Professional Services Needed: These rules will not require any additional professional services.

Costs of Compliance: The new and amended rules do not impose any additional reporting requirements on the licensee. The rules do not require that licensees keep any records other than those they would keep in the normal course of business.

Comparison of Cost - Small versus Large Employers: The majority of the companies licensed are small businesses. The department has worked to ensure that there will be no disproportionate costs on small businesses. The rules should decrease the cost of regulation for smaller licensees since the hourly charge for examinations is decreasing by $25 per hour. The annual assessments only apply to large licensees with transaction volumes over $1,000,000. The addition of the annual assessment will provide predictability to the licensees and a continued, predictable source of funding for the program.

Hearing Location: The public hearing will commence at 10:00 a.m. on Tuesday, April 8, 1997, in Room 300, General Administration Building, 210 11th Avenue S.W., Olympia, WA.

Submit Written Comments to: Written comments may be submitted on or before April 7, 1997, to Ed Burgert, Program Manager, P.O. Box 41200, Olympia, WA 98504-1200.

Date of Intended Adoption: April 8, 1967 [1997].

A copy of the statement may be obtained by writing to Ed Burgert, Program Manager, Department of Financial Institutions, Consumer Services Division, Mailstop 1200, Olympia, WA 98504-1200, phone (360) 902-8727, or FAX (360) 664-2258.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. In accordance with section 201(5), not applicable.

Hearing Location: 300 General Administration Building, Olympia, WA, on April 8, 1997, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Victoria W. Sheldon by April 4, 1997, TDD (360) 664-8126.

Submit Written Comments to: Ed Burgert, FAX (360) 586-5068, by April 7, 1997.

Date of Intended Adoption: April 8, 1997.

March 3, 1997

Mark Thomson

Assistant Director

Division of Administrative

and Consumer Services

AMENDATORY SECTION (Amending WSR 96-03-059, filed 1/12/96, effective 2/12/96)

WAC 208-630-020 Schedule of fees paid by licensees and applicants. (1) The director shall collect the following fees:

(a) ((A fee of ninety dollars per employee hour expended for services plus actual expenses for review of application and investigation for:

(i) New license application.

(ii) Additional locations.

(iii) Change of control.

(iv) Relocation of office.

(v) Voluntary or involuntary liquidation of licensee.

(vi) Small loan endorsement application.

(b) The director may require a lump sum payment in advance to cover the anticipated cost of review and investigation of the activities described in (a) of this subsection. If the lump sum payment required under this section exceeds the actual amounts derived in (a) of this subsection, the amount in excess shall be refunded.

(2) The fee for examinations described in WAC 50-30-010 (2) and (3) shall be ninety dollars per employee hour expended.)) Charges for costs incurred by the division for review and investigation of applications;

(b) An annual assessment charge; and

(c) Charges for examinations described in WAC 208-630-015.

(2) Fees must be paid promptly when due but no later than thirty days after receipt of any billing from the division.

[Statutory Authority: RCW 43.320.040 and 31.45.200. 96-03-059, recodified as 208-630-020, filed 1/12/96, effective 2/12/96. Statutory Authority: 1991 c 355 24. 92-02-105, 50-30-020, filed 1/2/92, effective 2/2/92.]

NEW SECTION

WAC 208-630-021 Application review and investigation fee. (1) The director shall collect a fee of sixty-five dollars per employee hour expended for services, plus actual expenses, for review of application and investigation of:

(a) New license applications;

(b) Additional locations;

(c) Change of control;

(d) Relocation of office;

(e) Voluntary or involuntary liquidation of licensee; and

(f) Small loan endorsement applications.

(2) The director may require a lump sum payment in advance to cover the anticipated cost of review and investigation of the activities described in this section. If the lump sum payment required exceeds the actual amount derived in subsection (1) of this section, the amount in excess shall be refunded.

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NEW SECTION

WAC 208-630-022 Annual assessment charge. (1) The director will charge each licensee an annual assessment at the rate set forth in subsection (2) of this section. Assessments for a calendar year will be computed on total volume of transactions as of December 31 of the previous calendar year. For licensees with a fiscal year of January through December, annual assessments are due on or before April 15. For licensees with a fiscal year other than that stated above, annual assessments are due one hundred five days after the close of the licensee's fiscal year. For the calendar year 1997, annual assessments for all licensees are due on or before June 30, 1997.

(2) The annual assessment rate is:

(a) For check cashers:

(i) If the volume of checks cashed is one million dollars or less, there is no annual assessment;

(ii) If the volume of checks cashed is over one million dollars, the annual assessment is five hundred dollars per licensed location.

(b) For check sellers:

(i) If the volume of checks sold is one million dollars or less, there is no annual assessment;

(ii) If the volume of checks sold is over one million dollars, the annual assessment is five hundred dollars per licensed location.

(c) For licensees with small loan endorsements, in addition to (a) and/or (b) of this subsection:

(i) If the volume of small loans made is one million dollars or less, there is no annual assessment;

(ii) If the volume of small loans made is over one million dollars, the annual assessment is five hundred dollars per licensed location.

(3) For purposes of this section, "volume" includes all transactions made under this chapter and chapter 31.45 RCW by a Washington licensed check casher or check seller at all licensed locations.

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NEW SECTION

WAC 208-630-023 Examination fees. The fee for examinations described in WAC 208-630-015 shall be sixty-five dollars per employee hour expended.

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