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HB 656

AN ACT relating to deferred deposit transaction fees imposed by the commissioner.

2026 Regular Session Introduced by Sarge Pollock

The bill clarifies and expands the regulator’s authority to set, cap, disclose, and enforce deferred deposit transaction fees for payday loans in Kentucky.

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Bill Summary · HB 656

Overview

HB 656 (2026 Regular Session, Kentucky) proposes changes to the rules governing deferred deposit transaction fees, as imposed by the commissioner. The bill appears to address how these fees are set, disclosed, and administered, with the intent of clarifying regulatory authority and statutory requirements related to deferred deposit transactions (DDTs), commonly known as payday loans, and the fees charged in connection with such products.

Purpose and Intent

  • Establish or modify the framework for deferred deposit transaction fees overseen by the state commissioner (likely the Commissioner of the Department of Financial Institutions or equivalent regulatory body in Kentucky).
  • Align fee-related provisions with consumer protection and regulatory oversight goals, ensuring transparent charging practices and consistent enforcement.
  • Provide statutory clarity to industry, regulators, and consumers regarding permissible fees, how they are calculated, and under what conditions they may be assessed.

Key Provisions and Changes (as implied by title and typical structure)

Note: The summary reflects the bill’s stated focus on “deferred deposit transaction fees imposed by the commissioner.” Without the full text, the following provisions are inferred and common to fee-related regulatory bills:

  • Fee Authority: Clarification or expansion of the commissioner's authority to impose, adjust, or cap deferred deposit transaction fees charged by licensees.
  • Fee Calculation: Rules governing how deferred deposit transaction fees are calculated, including possible caps, tiers, or maximum annual percentage rates (APRs) associated with DDTs.
  • Disclosure Requirements: Requirements that licensees disclose fees clearly to consumers prior to entering into a deferred deposit agreement, including total cost and annualized rate information.
  • Fee Reporting and Oversight: Provisions mandating periodic reporting of fee data by licensees to the regulator, and potential audits or examinations to ensure compliance.
  • Consumer Protections: Provisions designed to prevent excessive or deceptive fees, prohibit certain fee practices, and ensure fair treatment of borrowers.
  • Enforcement Mechanisms: Penalties or corrective actions for violations related to fee imposition, disclosure, or collection, including possible license suspension or fines.
  • Effective Date and Transition: Timothy or phase-in dates for any new fee rules, along with any regulatory guidance or transition periods for licensees.

Who Would Be Affected

  • Licensed deferred deposit lenders operating in Kentucky (entities offering payday-style loans or deferred deposit agreements).
  • The regulatory regulator or department responsible for financial institutions/consumer finance oversight (the commissioner).
  • Kentucky consumers who obtain deferred deposit loans, as they would see changes in fee structures, disclosure, and protections.

Procedural and Timeline Aspects

  • Introduction: February 18, 2026.
  • Early referral: Referred to the Banking & Insurance Committee (H) on February 25, 2026, and previously to the Committee on Committees (H) on February 18, 2026.
  • Next steps: The bill would likely proceed through standard committee review, potential amendments, floor votes, and ultimately any conference actions if the Senate version differs. The precise timetable depends on committee schedules and legislative priorities.

Potential Implications

  • If the commissioner’s authority to impose or adjust fees is broadened, licensees may face changes in cost structures, which could influence product pricing decisions.
  • Strengthened disclosure and oversight could improve transparency for borrowers and reduce deceptive or unfair fee practices.
  • The bill could create transitional requirements for existing agreements and necessitate changes to compliance programs within lending companies.

If you can provide the bill’s full text or specific sections, I can tailor this summary to reflect exact statutory language, include precise fee amounts or caps, and outline any differential provisions (e.g., limits by loan amount, term, or borrower category).

Compiled from official sources — confirm details with the bill’s official record.

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