Yesterday, the California Office of Administrative Law approved the Department of Financial Protection and Innovation’s (DFPI) proposed commercial financing disclosure regulations. The DFPI adopted these regulations pursuant to SB 1235 (Glazer), 2018 Cal. Stats. ch. 1011. The DFPI’s final statement of reasons is available here. The regulations do not take effect until December 9, 2022.
The DFPI began the process of writing regulations in 2020. After publishing its initial rule proposal, the DFPI submitted four proposed modifications of it proposed text for public comment. This process is not unusual, but it does raise the question about who bore the cost of the rulemaking. The DFPI is what is known as a special fund department within California government. This means that it is supported by the fees paid by its licensees. Many of the DFPI’s licensees, however, are not subject to the new law (e.g., depository institutions) or simply do not make loans at all. These entities should not be saddled with these regulatory costs.