On March 17, the California Department of Financial Protection and Innovation (DFPI) proposed its long-awaited registration requirements for certain covered persons under the California Consumer Financial Protection Law (CCFPL). The DFPI also proposed certain clarifying amendments to the California Financing Law (CFL) regarding advances. The text of the proposed regulations can be found here.
The CCFPL excludes from registration covered persons holding certain licenses, such as under the CFL, when acting within the scope of a license. The proposed regulations implement these exclusions by limiting registration to persons engaged in the following four businesses, each as defined in the regulations:
- Debt settlement services,
- Student debt relief services,
- Education financing, and
- Income-based advance products and services.
“Registration” under other regulatory schemes, such as the Uniform Consumer Credit Code, involves minimal submissions of information regarding the registrant and the payment of annual fees. However, the proposed regulations set forth a regime that is barely distinguishable from “licensing” under laws like the CFL, requiring the submission of MU1s and MU2s on NMLS, including information regarding directors, “principal officers” as defined and 10% or more direct or indirect owners, and supplemental information depending upon one or more of the four businesses in which the registrant engages. The proposed regulations also provide for extensive annual reporting by registrants, and supplement current annual reporting requirements for persons offering these four categories of businesses under existing licenses like the CFL.
In addition, the proposed regulations if adopted would “clarify” the CFL with respect to a number of matters involving income-based advances, including stating that income-based advances are “loans,” and voluntary or optional payments in connection with loans are “charges,” for purposes of the CFL.
Comments are due by May 2. If you have questions regarding the registration requirements or the CCFPL generally, please contact any of the authors or the Manatt professional with whom you work.