Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services (DFS) is issuing a new emergency regulation to halt annual increases and maintain the current maximum check cashing fee at 2.27% while a new fee methodology is developed.
“As our world evolves, so must our approach to regulation, which is why for the first time in Department history, we are reexamining the methodology used to determine the maximum check cashing fee,” said Superintendent Harris. “DFS has a responsibility to take a hard look at the impacts of financial products and services on New Yorkers, especially members of underserved communities. We must continually assess our regulations to ensure that they still meet the needs of New Yorkers today and into the future. Maintaining the status quo is in direct opposition of our goal to create a fairer and more transparent financial system.”
The Department has been actively engaging with the Legislature and consumer advocates on concerns related to the check cashing industry. DFS is aware that many New York consumers, particularly members of immigrant communities and people of color, depend on check cashers as an essential service to fulfill their financial services needs. DFS understands the importance of getting the maximum fee calculation right, especially while many still feel the adverse economic impact of COVID-19. To address these concerns, during this economically challenging time, DFS is issuing this emergency regulation to halt and maintain the maximum check cashing fee of 2.27%, set in February 2021.
The emergency regulation also underscores DFS’ concern over the fixed methodology by which the maximum check cashing fee increases every year, which is derived from the Consumer Price Index (CPI). The CPI is a broad, regional measure of consumer prices that measures the average prices of a basket of consumer goods and services for the New York metropolitan area. The CPI is not necessarily a reliable or accurate indicator of the costs of operating within a specific sector of business, such as financial services. Furthermore, unexpected events, such as a prolonged pandemic, can have additional adverse impacts on the financial health of underserved communities, which primarily rely on check cashing services for liquidity.
Following a reassessment of the maximum check cashing methodology, DFS will promulgate a proposed regulation and seek public comments before issuing a final regulation. Until such regulation is adopted, this emergency regulation will maintain the 2021 fee of 2.27%.
Please find a copy of the emergency regulation on the DFS website.
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