California bill would establish a registration program for commercial financing or commercial financing brokerage services

I recently wrote about the California Office of Administrative Law’s rejection of regulations proposed by the Department of Financial Protection and Innovation. The proposed regulations were intended to: “implementing, interpreting, and establishing detailed enrollment requirements for covered persons under the California Consumer Financial Protection Act; licensee exemption requirements from registration under the California Financing Act, the California Deferred Deposit Transactions Act and the Student Loan Servicing Act; and regulations relating to certain advances under the California Financing Act.”

OAL rejected these regulations because they found they did not meet the “clarity” standards imposed by the California Administrative Procedure Act. The transparency standard requires that regulations be “written or presented in such a way that the meaning of the regulations is readily understood by those who are directly affected by them.” Feces. Government. Code § 11349(c).

Given the OAL’s findings, one cannot help but be amazed that two legislators, Senators Steve Glazer and Monique Limón, chose to copy this vague language into the bill SB 1482. The bill would establish a registration, rather than licensing, program under the California statute. Consumer Financial Protection Act for the purposes of offering “commercial financing” or “commercial financing brokerage services”, in each case as defined.

The bill’s lack of clarity is best illustrated by the confusion over whether people or products should be registered. The first sentence of proposed Section 90025(a) of the Financial Code provides that “a person shall not engage in the business of offering or furnishing the subject products without first registering with the commissioner…”. However, the next sentence states that “a person wishing to offer or provide more than one subject product should obtain a separate registration for each product concerned” (emphasis added).

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