Title of Regulation: 10VAC5-110. Credit Counseling (adding 10VAC5-110-30).

Statutory Authority: §§ 6.1-363.14 and 12.1-13 of the Code of Virginia.

Effective Date: January 1, 2010.

Agency Contact: Gerald Fallen, Deputy Commissioner, Bureau of Financial Institutions, State Corporation Commission, P. O. Box 640, Richmond, VA 23218, telephone (804) 371-9699, FAX (804) 371-9416, or email gerald.fallen@scc.virginia.gov.

Summary:

The State Corporation Commission is adopting a regulation that prescribes the annual fees to be paid by credit counseling agencies licensed under Chapter 10.2 (§ 6.1-363.2 et seq.) of Title 6.1 of the Code of Virginia to defray the costs of their examination, supervision, and regulation. The adopted final regulation revises the schedule contained in the proposed version of the regulation. Under the final regulation, if a licensee maintains less than 250 debt management plans for Virginia residents as of December 31 of the calendar year preceding the year of assessment, the licensee will be required to pay an annual fee of $0 plus $4.33 per debt management plan. If a licensee maintains 250 or more debt management plans for Virginia residents as of December 31 of the calendar year preceding the year of assessment, the licensee will be required to pay an annual fee of $500 plus $4.33 per debt management plan.

AT RICHMOND, DECEMBER 9, 2009

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. BFI-2009-00276

Ex Parte: In re: annual fees for
licensed credit counseling agencies

ORDER ADOPTING A REGULATION

On April 17, 2009, the State Corporation Commission ("Commission") entered an Order to Take Notice of a proposal by the Bureau of Financial Institutions ("Bureau") to adopt a regulation pursuant to § 6.1-363.14 of the Code of Virginia. The proposed regulation, 10 VAC 5-110-30, sets forth a schedule of annual fees to be paid by credit counseling agencies licensed under Chapter 10.2 of Title 6.1 of the Code of Virginia ("licensees") in order to defray the cost of their examination, supervision, and regulation. The Order and proposed regulation were published in the Virginia Register of Regulations on May 11, 2009, posted on the Commission's website, and mailed to all licensees. Licensees and other interested parties were afforded the opportunity to file written comments or request a hearing on or before May 20, 2009.

Comments on the proposed regulation were filed by Credit Card Management Services, Inc., the Center for Child & Family Services d/b/a Consumer Credit Counseling Services of Hampton Roads ("CCCSHR"), American Debt Counseling, Inc., Family Credit Counseling Service, Inc. d/b/a Family Credit Management Services, and Virginia State Senator John Miller. Additionally, the American Association of Debt Management Organizations ("AADMO") filed comments on the proposed regulation and requested a hearing.

On October 28, 2009, the Commission convened a hearing to consider the adoption of the proposed regulation. Michael Edmonds, Executive Director of CCCSHR, offered testimony supporting the written comments filed on behalf of CCCSHR and indicated, among other things, that (i) CCCSHR is a non-profit agency that offers credit counseling services through nine credit counseling employees and administers debt management plans for 496 clients, (ii) the proposed assessment schedule unfairly imposes additional fees on the non-profit community and penalizes smaller non-profits by charging the highest fees to those who have fewer clients, and (iii) the Commission should consider waiving the fee for non-profit agencies with fewer than 600 clients whose main offices are in Virginia.

In support of the proposed regulation, the Commissioner of Financial Institutions expressed in a letter to AADMO dated October 16, 2009 that in addition to the direct costs associated with the examination of licensees, the Bureau incurs other expenses including a share of the operation and maintenance of the agency's headquarters building, the procurement, configuration, and support of its information technology resources, legal support, accounting, and fringe benefit administration. All of these costs are defrayed through annual assessments and other fees paid by licensees and other types of institutions that are supervised and regulated by the Bureau. The Commissioner of Financial Institutions also pointed out that although Chapter 10.2 of Title 6.1 of the Code of Virginia has been in effect for five years, licensees have yet to pay any annual fees in order to defray the costs of their examination, supervision, and regulation. Moreover, the Bureau has conducted 50 examinations of licensees during this period, thereby incurring direct and associated costs of $89,923. In addition to these examination expenses, the Commissioner of Financial Institutions indicated that the total annual overhead cost allocated to licensees is $36,166.

The Bureau concluded that a total annual assessment of $117,144 was required for the oversight of licensees and offered into the record several proposed schedules designed to generate the target amount of income ("Schedule" or "Schedules"). The initial Schedule, which was set forth in the proposed regulation, prescribed a base fee of $500 plus an additional amount per debt management plan ("DMP") which varied based on the total number of DMPs maintained by a licensee for Virginia residents as of December 31 of the calendar year preceding the year of assessment. At the hearing Staff counsel introduced a document containing three alternative assessment Schedules, which was accepted into the record as Exhibit 2. The three alternative assessment Schedules contained in Exhibit 2 set forth a base fee of either $0 or $500, plus an additional amount of between $3.93 and $4.69 per DMP. Another alternative assessment Schedule was accepted into the record as late-filed Exhibit 3 and set forth a base fee of either $250 (if a licensee maintained less than 250 DMPs) or $500 (if a licensee maintained at least 250 DMPs) plus an additional amount of $4.13 per DMP.

NOW THE COMMISSION, having considered the proposed regulation, the record herein, and applicable law, concludes that the proposed regulation should be modified to reflect the second alternative described in Exhibit 2, and that the proposed regulation, as modified, should be adopted with an effective date of January 1, 2010. Under this alternative, a licensee will be required to pay an annual fee that is comprised of the sum of (i) a base fee of $0 if the licensee maintained less than 250 DMPs for Virginia residents as of December 31 of the calendar year preceding the year of assessment, or a base fee of $500 if the licensee maintained 250 DMPs or more for Virginia residents as of December 31 of the calendar year preceding the year of assessment; and (ii) $4.33 per DMP maintained by the licensee for Virginia residents as of December 31 of the calendar year preceding the year of assessment.

Accordingly, IT IS ORDERED THAT:

(1) The proposed regulation, 10 VAC 5-110-30, as modified herein and attached hereto, is adopted effective January 1, 2010.

(2) This Order and the attached regulation shall be posted on the Commission's website at http://www.scc.virginia.gov/case.

(3) The Commission's Division of Information Resources shall send a copy of this Order, including a copy of the attached regulation, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

(4) This case is dismissed from the Commission's docket of active cases.

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to: Paul Donohue, Credit Card Management Services, Inc., 4611 Okeechobee Boulevard, Suite 114, West Palm Beach, Florida 33417; Michael Edmonds, Executive Director, Center for Child & Family Services d/b/a Consumer Credit Counseling Services of Hampton Roads, P.O. Box 7315, 2021 Cunningham Drive, Suite 400, Hampton, Virginia 23666; Alan Silverberg, Chief Executive Officer, American Debt Counseling, Inc., 14051 NW 14^th Street, Sunrise, Florida 33323; Patrick F. Steva, Legal Compliance Coordinator, Family Credit Counseling Service, Inc. d/b/a Family Credit Management Services, 4306 Charles Street, Rockford, Illinois 61108; Mark Guimond, Executive Director, American Association of Debt Management Organizations, 5210 Laurelwood Drive, Kingwood, Texas 77345; and to the Commissioner of Financial Institutions, who shall mail a copy of this Order and the attached regulation to all licensed credit counseling agencies and any applicants currently seeking a license under Chapter 10.2 of Title 6.1 of the Code of Virginia.

10VAC5-110-30. Schedule of annual fees for the examination, supervision, and regulation of credit counseling agencies.

Pursuant to § 6.1-363.14 of the Code of Virginia, the commission sets the following schedule of annual fees to be paid by persons licensed under Chapter 10.2 (§ 6.1-363.2 et seq.) of Title 6.1 of the Code of Virginia. The fees are to defray the costs of examination, supervision, and regulation of licensees by the Bureau of Financial Institutions.

SCHEDULE

[ The annual fee shall be $500 plus the following additional amount based on the total number of debt management plans maintained in Virginia as of December 31 of the calendar year preceding the year of assessment:

Total Number of Debt Management Plans	Amount
Less than 501	$5.00 per debt management plan
501 to 1,000	$4.00 per debt management plan
1,001 to 2,000	$3.00 per debt management plan
2,001 to 3,000	$2.50 per debt management plan
Over 3,000	$2.00 per debt management plan

If a licensee maintained less than 250 debt management plans for Virginia residents as of December 31 of the calendar year preceding the year of assessment, the licensee shall pay an annual fee of $0 plus $4.33 per debt management plan.

If a licensee maintained 250 or more debt management plans for Virginia residents as of December 31 of the calendar year preceding the year of assessment, the licensee shall pay an annual fee of $500 plus $4.33 per debt management plan. ]

The fee assessed using the above schedule shall be rounded down to the nearest whole dollar.

Fees shall be assessed on or before June 1 for the current calendar year. The fee shall be paid on or before July 1.

The annual report, due March 25 each year, of each licensee provides the basis for its assessment. In cases where a license has been granted between January 1 and March 25 [ of the year of assessment ], the licensee's [ initial ] annual fee shall be $250.

Fees prescribed and assessed by this schedule are apart from, and do not include, the reimbursement for expenses permitted by subsection B of § 6.1-363.14 of the Code of Virginia.