The the website of the California Department of Business Oversight (DBO) is a posting about the proposal to for Consumer Financial Protection and Innovation. The California Consumer Financial Protection Law (CCFPL) mentioned on the website and in a budget document offers no details or links to text of the proposal. Yet, the CCFPL is summarized in a budget document.
“The proposed CCFPL will provide the DBO with additional consumer protection authority, including:
- “The authority to bring actions for unfair, deceptive, abusive acts or practices committed by any person offering or providing financial products or services to Californians;
- “Encouraging innovative financial products and services;
- “Specialized monitoring, research, and enforcement units within the DBO to stop abuses swiftly before thousands of Californians are victimized;
- “New policy and regulation functions to provide transparency, informs the industry and the public, and makes sure that regulatory oversight keeps up with evolving financial markets; and
- “Expanded education, outreach, and communication with a focus on fair lending practices, which will be further enhanced by providing consumers resources to make better informed financial decisions.”
As noted on the website,
“Governor Gavin Newsom’s proposed 2020-21 state budget includes the California Consumer Financial Protection Law (CCFPL), which seeks to cement California’s consumer protection leadership amidst a retreat on that front by federal agencies including the Consumer Financial Protection Bureau, which also remains subject to constitutional challenge.
“The new law would revamp the Department of Business Oversight as the Department of Financial Protection and Innovation and empower the Department to provide consumers greater protection from predatory practices while facilitating innovation and ensuring a level playing field for all companies operating responsibly in California.
“The purpose of this proposal is to:
- “Restore financial protections that have been paralyzed at the federal level.
- “Protect consumers from predatory businesses, without imposing undue burdens on honest and fair operators.
- “Spur – not stifle – innovation in financial services by clarifying regulatory expectations for emerging products and services.
- “Extend state oversight to important financial-services providers not currently subject to state supervision.
- “Increase public outreach and education, especially for vulnerable populations.
- “Provide more effective responses to consumer complaints.
“The proposal would:
- “Create an Office of Financial Technology Innovation, based in San Francisco, to study emerging technologies in financial services including virtual currencies, and to engage with California companies developing new financial products and services.
- “Promote innovations by amending the Financial Code to make California’s banking ecosystem a more viable option for new entrants.
- “Establish research units to anticipate trends in assessing new financial products and allow the department to preemptively curb practices that will harm consumers.
- “Establish a new consumer protection ombudsperson.”
The posting directs readers to Governor Newsom’s Budget Summary 2020 – 21 and stories in Bloomberg: California Seeks New Fintech Regulation in Agency Overhaul and the LA Times: Column: Newsom to Unveil Plan for California Consumer Financial Watchdog Agency.
The budget document notes a departmental request for “$10.2 million and 44.0 positions in 2020-21, $14.8 million and 72.0 positions in 2021-22, and $19.3 million and 90.0 positions in 2022-23 and ongoing to implement the California Consumer Financial Protection Law (CCFPL). The CCFPL will examine, investigate and supervise unregulated financial products to protect California consumers from illegal, deceptive, or unscrupulous practices. This program will encourage innovative financial products and provide consumer outreach and education to students, new Californians, military service members and seniors.”
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More