SACRAMENTO, Calif.—With the official passage of the California Consumer Protection Act, California’s Department of Business Oversight (DBO) will be renamed the California Department of Financial Protection and Innovation and given expanded powers.
The state legislature said the move will increase financial regulation and consumer protection in the Golden State.
California Gov. Gavin Newsom signed the bill, originally introduced on Jan. 7, 2020, and it is effective starting Jan. 1, 2021.
According to the DBO, under the law the department will have expanded enforcement powers to protect California consumers from pandemic-inspired scams, promote innovation, clarify regulatory hurdles for emerging products and increase education and outreach for vulnerable groups.
“We have already seen an increase in predatory financial lending and scams as the most vulnerable in our state try to weather the economic downturn induced by the COVID-19 pandemic,” said Manuel Alvarez, DBO commissioner. “This legislation will allow us to increase consumer protections without imposing undue burdens on honest and fair operators.”
Extended Oversight
The DBO currently licenses and regulates several types of financial services such as state-chartered banks and credit unions, mortgage lenders and servicers, escrow companies etc. The new authority, however, will extend their oversight to debt collectors, credit reporting agencies and bureaus and some fintech companies, Banking Exchange said.
A market monitor and research arm will also be established as the Division of Consumer Financial Protection to track the latest financial products.
“This is a landmark law to protect all Californians,” said Lourdes Castro Ramírez, California Business, Consumer Services and Housing Agency secretary. “It is now even more important with the financial challenges faced by many individuals and households impacted by the economic losses caused by the COVID-19 pandemic and the recent wildfires.