In the wake of the Office of Administrative Law’s approval of its registration and reporting requirements for providers of income-based advances, private postsecondary education financing, debt settlement services, and student debt relief services, California’s Department of Financial Protection and Innovation (“DFPI”) has issued an invitation for comment on “what other industries…the DFPI should establish registration and reporting requirements for under the [California Consumer Financial Protection Law].”
The DFPI is empowered by the CCFPL to create through rulemaking “registration requirements applicable to a covered person engaged in the business of offering or providing a consumer financial product or service.” Cal. Fin. Code § 90009(a). It is worth noting that the CCFPL limits the DFPI to providers of consumer financial products and services, so the DFPI cannot require registration of providers of commercial financing, for instance. An effort to create registration requirements for such providers through legislation failed earlier this year.
The CCFPL also limits the DFPI’s authority with a provision stating that registration requirements cannot be created for “[a] covered person who is licensed by the department under another law and who is providing a financial product or service within the scope of that license.” Cal. Fin. Code § 90009(a). However, the DFPI successfully maneuvered its way around this limitation in its first set of registration requirements by creating exemptions for covered persons already providing the product or service within the scope of another license.
The DFPI lists nine specific questions for which it is seeking comments:
- For what additional industries should the DFPI establish registration requirements under Financial Code section 90009, subdivision (a)?
- What consumer protection risks do those industries present to consumers that would make it appropriate to prioritize the registration of those industries over others?
- The DFPI invites stakeholders to submit examples of acts or practices in those industries that stakeholders find concerning.
- For each industry suggested for registration, what trade associations, if any, represent that industry?
- For each industry that a stakeholder states should be a priority for registration, what rules should the DFPI establish to facilitate oversight of the industry, what records should the DFPI require those registrants to maintain, and what requirements should the DFPI impose to ensure that covered persons are legitimate and able to perform their obligations to consumers? (Fin. Code § 90009, subd. (b).)
- What data should the DFPI require registrants to submit in annual or special reports to the DFPI? (Fin. Code § 90009, subd. (f)(2).) Why should the DFPI collect this data?
- For each industry that a stakeholder states should be a priority for registration, are there terms applicable to the industry that are not currently defined under the CCFPL? Should DFPI consider promulgating regulation text defining these terms? What should be the content of these definitions?
- For each industry suggested for registration, provide any information relevant to estimating the number of players in the industry. How many companies would be impacted by a registration requirement?
- For each industry suggested for registration, the DFPI invites stakeholders to provide a description of the economic impact (if known), including potential costs and benefits, of the recommendation for California businesses and consumers.
The DFPI also invites stakeholders to provide example language for regulations. Comments are due by December 12, 2024.