Newly Enacted California Consumer Financial Protection Law (AB 1864) Reorganizes and Renames Financial Institutions Regulator for Expanded Oversight of Certain Consumer Financial Services Innovation Sector.

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Introduction

California has enacted a new California Consumer Protection Law (CCFPL), California Financial Code Section 90001 et seq.  The CCFPL will convert the Department of Business Oversight (DBO) into a new Department of Financial Protection and Innovation (DFPI).  AB 1864 was sent to the California Governor on September 4, 2020 for signature, and he is expected to sign within thirty (30) days.

In its new form, the DFPI will continue to supervise financial institutions previously overseen by the DBO.  However, the coverage of the expanded scope of prohibited acts which the CCFPL empowers the DFPI to regulate and enforce is more limited.  National and state chartered depository institutions, bank holding companies and trust companies, as well as most entities and persons currently licensed by the DBO and other California licensing agencies including real estate brokers and insurers, are not subject to these new prohibitions and powers in the CCFPL.  The DFPI will continue to have the scope of regulatory authority over such institutions and persons that the DBO currently has, but that authority is not expanded by the CCFPL.

Instead, the CCFPL focuses on entities and persons that to date have not been formally licensed and supervised in California. These include certain FinTech companies and …

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