(a) The department was asked whether it was legally permissible for a premium finance agency to take the service charge authorized by section 568(4) of the Banking Law in one lump sum at the beginning of the related transaction or whether it must, on the contrary, pro-rate such charge over the life of the repayment contract and collect it periodically along with installments of principal.

(b) The department, after a careful review of the legislative history of article XII-B of the Banking Law and with particular emphasis on section 568(1), forbidding agencies from taking any greater charges than are permitted by that article, concluded that payment of the full service charge at the beginning of the contract rather than in installments over its term would constitute an expense to the borrower greater than that contemplated by the statute, since a “front end” payment of the service charge would immediately deprive the borrower of the use of the money concerned. Such an increase in the actual cost of the financing to the consumer was not, in the department's view intended by the Legislature and hence is legally impermissible.