Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.C.R. No. 114 entitled:

begs leave to report as follows:

The purpose of this measure is to request the Auditor to conduct a "sunrise" analysis of the regulation of check cashers.

The Department of Commerce and Consumer Affairs (DCCA), Legal Aid Society of Hawaii, Community Financial Services Association of America, Hawaii Asset Building Coalition, and Chaminade University Service Learning Program testified in support of this measure.

Check cashing establishments, also known as payday loan companies, make short-term loans to consumers by accepting a post-dated check or electronic fund transfer agreement with proper identification, charging a fee, and providing immediate cash. Chapter 480F, Hawaii Revised Statutes (HRS), establishes certain requirements for and limitations on check cashing transactions, but does not establish a system for the regulation of the check cashing profession.

S.B. No. 1413 (2005) proposes to require check cashers to file comprehensive annual reports with DCCA that disclose financial information about the check casher, provide detailed information about deferred deposit agreements made during the preceding calendar year, and verify that improper means are not being utilized to collect deferred deposits. Additionally, the bill would require check cashers to file copies of deferred deposit agreement forms with DCCA and to provide customers with a pamphlet that, among other things, informs customers that DCCA provides information about complaints filed about check cashers and the resolution of those complaints.

Your Committee finds that the above requirements appear to establish a system for the regulation of the check cashing profession. Your Committee further finds that the Hawaii Regulatory Licensing Reform Act (Act), codified in chapter 26H, HRS, requires that, before a bill is enacted that subjects a previously unregulated profession or vocation to regulatory control, the bill must first be referred by concurrent resolution to the Auditor for a "sunrise" analysis.

The Auditor is required to determine the probable effects of the proposed regulation, assess whether the bill's enactment is consistent with the Act's policies, and consider alternative forms of regulation. This measure effects the request to the Auditor for such an analysis.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 114 and recommends its adoption.