Publication | BRG
Mini-CFPB—California’s Department of Financial Protection and Innovation
Walter Mix and David Abshier
California Governor Gavin Newsom included as part of the 2020−2021 state budget a reorganization and expansion of the Department of Business Oversight (DBO). The reorganization includes a new name—the Department of Financial Protection and Innovation (DFPI)—and a significant expansion of its authority, including examination and enforcement resources and new licensing and examination authority. According to the DBO’s Budget Change Proposal, the purpose of the reorganization and additional funding is to provide the DBO with the enhanced powers and authorities necessary to be a “leader in providing consumer financial protection to California.”
Governor Newsom’s reorganization also includes the new California Consumer Financial Protection Law (CCFPL). The CCFPL creates a powerful state agency by giving the regulator the authority to take enforcement action against unfair, abusive, or deceptive acts or practices (UDAAP) and other authority similar to that of the Consumer Financial Protection Bureau (CFPB) under Dodd-Frank Act Title X. Under the CCFPL, the DFPI can take enforcement action for UDAAP violations, bring proceedings pursuant to Title X to enforce Title X and other regulations promulgated by the CFPB, and issue regulations and prescribe rules defining UDAAP. Under the CCFPL, proceedings can be brought against covered persons, California-licensed banks, savings and loans and credit unions, California Financing Law licensees, California Residential Lending Act licensees, and any other existing DBO licensees.