Ohio Senate
District 17 / Bob Peterson

State Senator

1 Capitol Square
Columbus, Ohio43215
(614) 466-8156 / Committees:
Ways and Means, Chair
Finance
General Government Subcommittee
Agriculture
Insurance
Public Utilities
Government Oversight and Reform
Education
Rulers and Reference

Senate Bill 355

Sponsor Testimony

Senate Financial Institutions Committee

Over a year ago, a group of consumer finance lenders with branch offices in my district came to the Statehouse to discuss an idea with me, and I am sure, several of you on this committee. These companies make traditional installment loans, usually of a few years in duration, and payable in equal monthly installments. They have a strong brick and mortar presence in communities throughout the state and some have been in the business of lending to Ohioans for more than a century. You might recognize names such as One Main, Springleaf, American General, Eagle Finance or Regency Finance.

These installment loan lenders have been operating under the Ohio Mortgage Loan Act – or OMLA – which was created to regulate this industry in the early 1970s. For decades, consumer finance companies were the only industry operating under the OMLA. However, when changes were made in 2008 to the Short-term Lending law, other types of lenders migrated to the OMLA as well. The provisions of the OMLA allow for a wide range of loan products to be offered by those licensed under it.

The traditional consumer installment loan industry wanted to create a new code section that better reflects the type of loans they make – keeping most of the terms of the OMLA but adding other provisions that better reflect installment lending. Senate Bill 355 – the Consumer Installment Loan Act or CILA – is a result of this effort.

Senate Bill 355 is simple and straightforward. It essentially copies most of the OMLA and replicates it in a new series of code sections. It then adds a list of requirements that better reflect traditional installment lending. These requirements include:

  • CILA loans must have at least a six month minimum loan term
  • CILA loans must be payable in equal monthly installments
  • CILA loans cannot be refinanced in the first 120 days of the loan terms and not more than three times in a 12 month period
  • CILA licensees cannot accept or make a loan brokered by a credit service organization

The Ohio Financial Services Association that represents installment lenders worked closely with its regulators at the Division of Financial Institutions at the Department of Commerce in drafting and revising the bill. It is my understanding that the Division made several changes to the bill – such as updating record keeping requirements and addressing examination periods – that the industry has accepted. The bill before you reflects that joint effort.

Additionally, other lenders and organizations have had the opportunity to review SB 355 and provide input. The following entities have reviewed the bill and do not have any concerns.

  • Coalition on Homelessness and Housing in Ohio (COHIO)
  • Ohio Attorney General’s Office
  • Ohio Bankers League
  • Ohio Consumer Lending Association
  • Ohio Mortgage Bankers Association
  • Pew Charitable Trust

The industry’s trade association and some of its officers will be here tomorrow to offer proponent testimony and can provide more detail for all of you. I am happy to answer any questions you may have at this time.