AB 2984: California Financing Law.

(1)Existing law, the California Financing Law (CFL), provides for the licensure and regulation of finance lenders and brokers, and, beginning on January 1, 2019, program administrators, by the Commissioner of Business Oversight. A willful violation of the CFL is a crime, except as specified. The CFL provides that it be liberally construed to promote specified purposes and policies.

This bill would revise the purposes and policies of the CFL.

(2) The CFL requires a finance lender, broker, and, beginning on January 1, 2019, program administrator licensee to file an annual report with the commissioner, on or before March 15, containing relevant information that the commissioner may specify.

This bill would require a licensee to include in the report information on all loans made with the participation of a 3rd party 3rd-party financial institution in connection with a contractual agreement with the licensee.

(3)The CFL authorizes the commissioner to examine specified records of every person engaged in the business of a finance lender, broker, or, beginning on January 1, 2019, program administrator, for the purpose of discovering violations of the CFL or securing information otherwise required in the administration and enforcement of this division.

This bill would require the commissioner to examine the affairs of each finance lender licensee for compliance at least once every 48 months. The bill would authorize the commissioner to conduct the examination under oath. By expanding the crime of perjury, this bill would impose a state-mandated local program. The bill would require the commissioner to provide a written statement of the findings of the examination, to issue a copy of that statement to the licensees principals, officers, or directors, and to take appropriate steps to ensure correction of any violations. The bill would authorize the commissioner to decline to disclose specified records relating to the examination in response to a public records act request pursuant to an existing exemption from disclosure. The bill would require the commissioner to assess, and a finance lender licensee to pay, the reasonable expenses of any examination of the licensee and affiliates.

(4)The CFL authorizes the commissioner to bring an action to enjoin, as specified, against a person who, in the commissioners estimation, has violated or is about to violate the CFL. Under the CFL, a person who willfully violates its provisions, rules, or regulations adopted pursuant to them, is liable for a civil fine not to exceed $2,500.

This bill would authorize, upon a proper showing, the appointment of a receiver, monitor, conservator, or other designated fiduciary or officer of the court for the defendant, in an action as described above, or for the defendants assets. The bill would specify the potential powers of these parties and prohibit any action in law or equity from being maintained against them for exercising the powers or performing their duties. The bill would eliminate the requirement that the penalty provisions, as described above, be willful. The bill would increase the maximum amount of the penalty provisions to $25,000.

This bill would also grant various powers to the commissioner in connection with any violation of the CFL, including imposing an administrative penalty of up to $25,000 for each violation, ordering ancillary relief including restitution, disgorgement, or damages, as specified, and entitling the commissioner in administrative actions to recover attorneys fees and costs, to be deposited in the State Corporation Fund for use by the department. The bill would prescribe certain requirements and procedures in connection with hearings and court actions in this regard.

(5)By expanding the scope of an existing crime with respect to willful violations of the CFL, this bill would impose a state-mandated local program. This bill would also make clarifying changes in the CFL.

(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.