The time has finally come. After the governor's approval of California's Debt Collection Licensing Act and the California Consumer Financial Protection Law back in September, California's new mini-CFPB—now called the Department of Financial Protection and Innovation (DFPI)—is officially in business. And, from the sound of it, DFPI intends to hit the ground running.
In a press release issued yesterday, DFPI announced that it will begin its work "immediately." What's on the docket? Several key points immerged. Read on to see the five main items DFPI has on its radar according to its announcement.
"[T]he DFPI will review and investigate consumer complaints against previously unregulated financial products and services, including debt collectors, credit repair and consumer credit reporting agencies, debt relief companies, rent to own contractors, private school financing, and more."
Market monitoring and research
"The DFPI is also in the process of standing up a new Division of Consumer Financial Protection that will feature a market monitoring and research arm to keep up with emerging financial products. Consumer outreach to target vulnerable populations, such as students, new Californians, military servicemembers and senior citizens will be expanded. An ombudsman will help independently investigate complaints against the Department and work to resolve process issues."
"The Department is also preparing to open a new Office of Financial Technology Innovation that will engage with new industries and consumer advocates to encourage consumer friendly innovation and job creation in California. This expansion will allow department representatives to work proactively with entrepreneurs and create a regulatory framework for responsible, emerging financial products."
"This spring, the DFPI will launch a statewide campaign to educate California consumers on how the department can support and protect consumers. Offering translation services in dozens of languages, the DFPI hotline will help all Californians. DFPI representatives never ask questions about a callers’ immigration status."
"To focus on these new activities and expanded charge, the DFPI will hire 90 additional employees over the next three years. The staffing increases will be financed from department reserves for the first three years. After that, the department projects increased annual costs of $19.3 million. The additional employees represent a 13 percent staffing increase."
Murmurs of a mini-CFPB in California have been going around for a while, starting in April 2019 when California Assemblywoman Monique Limón (D-Santa Barbara) initially explored the creation of the state agency with the federal Consumer Financial Protection Bureau's former director Richard Cordray at her side. Corday also advised California's governor on a potential state consumer protection agency about a year ago.
With Cordray's influence in California and the anticipated change in directorship once President-elect Biden — who was Vice President went the CFPB was formed and Cordray was appointed as its first director — takes office later this month, we are either entering a new era of consumer finance regulation or a season of déjà vu from the early 2010's. Either way, it's going to be a busy year for the industry.