California Consumer Financial Protection Law

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.

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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.
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The proposal also 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.
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The DBO expects to fund the $44.3 million start-up costs in the first three years by using existing reserves.

 

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References and additional information:

Last updated: Feb 21, 2020 @ 4:09 pm

Approved by Jim Sweeney 1/2020