California’s Consumer Financial Protection Law is in effect and the Department of Financial Protection and Innovation (DFPI) announced plans for reviewing consumer complaints in its monthly bulletin for January.
California Gov. Gavin Newsom approved the California Consumer Financial Protection Law (AB 1864), which creates a state consumer protection agency before the end of the state’s 2020 legislative session. The law also expands the state’s power to target unfair, deceptive and abusive acts and practices by financial service providers, ACA International previously reported.
Effective immediately, according to the DFPI bulletin, it will “review and investigate consumer complaints against previously unregulated financial products and services, including debt collectors, credit repair and consumer credit reporting agencies, debt relief companies, rent to own contractors, private school financing, and more.”
Under the consumer financial protection law, the DFPI will also:
- Significantly expand the state’s consumer protection capacity by adding dozens of investigators and attorneys to supervise financial institutions.
- Create a team to monitor markets to proactively identify emerging risks to consumers.
- Create a team dedicated to consumer education and outreach, listening and responding to consumers in specific communities, including veterans, immigrants and older Californians.
- Create a new Office of Financial Technology and Innovation, which will cultivate financial technology to serve consumers.
This spring, the DFPI will launch a statewide campaign to educate California consumers on how the department can support and protect consumers, according to its bulletin.
Licensing Requirements in the Works
Under a law passed last year, California is now one of 35 states to require a license for debt collection. Agencies have one year to apply.
The Debt Collection Licensing Act (SB 908), from California State Sen. Bob Wieckowski, D-Fremont, was signed into law by Newsom in September 2020.
It was welcome news for the accounts receivable management (ARM) industry and ACA that the governor approved both these measures, allowing for a separate licensing process outside of the DFPI.
With the governor’s signature on the licensing bill, the commissioner of the Department of Business oversight shall take all actions necessary to prepare to be able to fully enforce the licensing and regulatory provisions of this division, including, but not limited to, adoption of all necessary regulations by Jan. 1, 2022.
The California Association of Collectors (CAC) advocated to ensure workable options for consumers and the ARM industry in the licensing bill. And the Collectors Insurance Agency (CIA) licensing team had a seat at the table to negotiate the best licensing legislation possible for the ARM industry.
While a license will not be required until 2022, the state has indicated the application and its checklist should be submitted as soon as they are live in 2021. The law permits the state to use the electronic Nationwide Multistate Licensing System (NMLS) for the licensing process. There will also be a bonding requirement as part of the licensing process.
License applications will be due by Dec. 31, 2021, and the DFPI expects to begin the licensing process in late summer or fall next year. Debt collectors that apply for a license before the deadline next year would be allowed to operate pending the approval or denial of the application.
Under the law, the DFPI will also appoint a seven-member Debt Collection Advisory committee.
Even though the application is not available yet, ACA members and ARM industry professionals can contact the CIA licensing team to be added to the Licensing Service List. When the application and list of requirements is available, the team will provide more information on the service.
For more information on how the ACA licensing staff can assist with your licensing application completion needs in California as well as other states, please email email@example.com or call (952) 926-6547.