Governor Gavin Newsom recently signed into legislation Assembly Bill 1864, known as the California Consumer Financial Protection Law (CCFPL). As part of the legislation, the Department of Business Oversight (DBO) will be renamed the Department of Financial Protection and Innovation (DFPI).
The department establishes the nation’s toughest state consumer financial protection agency. The plan includes revamping the department by adding more staff and giving them additional authority in financial regulation. Ninety additional employees will be hired over a three-year period to support this endeavor.
Adds DFPI Commissioner Manuel P. Alvarez, “This new law will significantly increase consumer protections at this critical time without imposing undue burdens on honest and fair operations. In addition, it will cultivate and engage innovation while modernizing our operations so that we may serve consumers, licensees, and all Californians more meaningfully and efficiently.”
As part of the change, the Consumer Financial Protection Bureau (CFPB) will pull back some of its regulatory duties. Regulatory oversight for emerging products, increased education, and outreach to vulnerable groups will be handled at the state level. This includes expanding their oversight of pandemic-inspired scams and giving them additional enforcement powers to protect California consumers.
The new law takes effect on January 1, 2021. The Department will be tasked with protecting consumers from unfair, deceptive, or abusive practices committed by financial services companies or products that are currently unlicensed.
The DFPI will:
- Add dozens of investigators and attorneys to supervise financial institutions and put a stop to financial predators;
- Create a team to oversee markets and judiciously identify risks to consumers;
- Create a team committed to consumer outreach and education, including working with at-risk populations like veterans, immigrants, and older Californians; and
- Create a new Office of Financial Technology and Innovation, which will create new financial technology to aid consumers.
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