California enacts consumer financial protection law
The California legislature recently enacted a new consumer protection law, called the Consumer Financial Protection Law (CFPL).
The law was enacted under Assembly Bill 1864, which was passed Aug. 31. Gov. Gavin Newsom signed the new law on Sept. 25. Among other things, the law will change the name of one of the two main mortgage industry regulators from the Department of Business Oversight (DBO) to the Department of Financial Protection and Innovation (DFPI).
DocMagic published an article in January 2020, here, about plans included in the California governor’s budget proposal to create a new “mini-CFPB.” The Consumer Financial Protection Law is the result of those plans being enacted by the legislature. However, the new law differs significantly from the original proposal.
One of the main differences is that this law leaves intact existing regulatory structures for mortgage lenders, banks, credit unions, etc. The CFPL will create new registration and oversight schemes that are applicable to debt collectors, credit reporting agencies, and any other person offering consumer financial products not otherwise currently regulated in California.
The DFPI, while administering new oversight authority over broadened areas of consumer finance within the state, will also inherit the existing responsibilities and duties of the DBO, including oversight of existing licenses under the California Financing Law or the Residential Mortgage Lending Act and their requirements.
The powers granted to the DFPI expand the powers previously held by the DBO and include some of those granted to the Consumer Financial Protection Bureau under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. For example, the DFPI will be charged with performing market research and consumer outreach. The DFPI will also have new authority to find violations of Unfair, Deceptive or Abusive Acts or Practices (UDAAP) under the Consumer Financial Protection Law.
While there is no immediate change to the existing regulations relative to mortgage lending in California, there are some minor changes that DocMagic will implement ahead of the effective date, such as updating the name of the Department of Business Oversight to the Department of Financial Protection and Innovation on certain California disclosures. Please stay tuned to our form update notifications for those updates. The new law is effective Jan. 1, 2021.
Should you have any questions about the content of this article, please contact DocMagic’s Compliance Department.
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