When California Governor Gavin Newsome signed the Budget Act of 2020 at the end of June, the budget allocated $10.2 million in 2020-21, growing to $19.3 million in 2022-23 to the Department of Business Oversight, contingent upon enactment of the California Consumer Financial Protection Law. As previously posted, the California Consumer Financial Protection Law (“CCFPL”) sought to rename California Department of Business Oversight (“DBO”) into the more powerful Department of Financial Protection and Innovation (“DFPI”). The proposed DFPI would have the authority to bring enforcement actions against companies, issue fines and crack down on “unfair, deceptive and abusive acts or practices, and register providers of consumer financial services, among other powers. The stated goal of the DFPI, according to Governor Newsom, was for the DFPI to be a California version of the Consumer Finance Protection Bureau (“CFPB”).
Now, ahead of the August 31 end of the legislative session, the proposed CCFPL has resurfaced, as legislators, including California Assembly member Monique Limón, are hurrying to try to pass the CCFPL before the end of the month. The most recent version of the CCFPL is dated August 4, 2020, but much of it appears to be up in the air. While some in the banking industry welcome the CCFPL as increasing the regulation on newer online financial institutions, others contend the CCFPL goes too far as it lacks clarity, including who is covered, and argue the new regulations are redundant.
We will continue to monitor developments on the CCFPL and in this area. If you have questions or need additional information or guidance, please contact Laszlo Ladi at email@example.com