Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 129

Introduced by Assembly Member Dickinson

January 15, 2013

An act to amend begin delete Section 22201 end delete begin insert Sections 22361 and 22362 end insert of the Financial Code, relating to finance lenders.

LEGISLATIVE COUNSEL’S DIGEST

AB 129, as amended, Dickinson. Finance lenders.

Existing law, the California Finance Lenders Law, provides for the licensure and regulation by the Commissioner of Corporations begin insert until July 1, 2013, and thereafter by the Deputy Commissioner of Business Oversight for the Division of Corporations, end insert of those engaged in making consumer loans, as defined, and makes a willful violation of its provisions a misdemeanor. Existing law begin delete defines the term charges for purposes of regulating consumer loans under the California Finance Lenders Law. end delete begin insert , until January 1, 2015, establishes the Pilot Program for Affordable Credit-Building Opportunities for the purpose of increasing the availability of credit-building opportunities to underbanked individuals seeking low-dollar-value loans. Existing law requires licensees to file an application with, and pay a fee to, the commissioner to participate in the program. Existing law authorizes a licensee participating in the program to use the services of a finder, as defined, and regulates the activities and compensation of those finders. Existing law requires the commissioner to examine the performance of each licensee in the program at least once every 24 months, and requires the costs of examination to be paid by the licensee to the commissioner, as specified. Existing law also requires the commissioner to conduct a random sample survey of borrowers under the program and to report to specified legislative committees, by January 1, 2014, summarizing utilization of the Pilot Program for Affordable Credit-Building Opportunities, as specified. Existing law provides that information provided by a licensee to the commissioner for purposes of the report is exempt from public disclosure requirements. end insert

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This bill would extend the pilot program until January 1, 2016, and change the date for the committees to report to the legislative committees to January 1, 2015. This bill would also provide legislative findings demonstrating the need for the limitation on disclosure of the information provided to the commissioner by a licensee for purposes of preparing the report regarding the program.

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Because a willful violation of certain provisions under the pilot program would be a crime, this bill would impose a state-mandated local program.

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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.

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

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This bill would make a nonsubstantive change to these provisions.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 22361 of the end insert begin insert Financial Code end insert begin insert is amended
to read: end insert

22361.  

(a) On or before January 1, begin delete 2014, end delete begin insert 2015, end insert the
commissioner shall submit a report to the Senate Committee on
Banking, Finance and Insurance, the Assembly Committee on
Banking and Finance, and the Senate and Assembly Committees
on Judiciary, in compliance with Section 9795 of the Government
Code, summarizing utilization of the Pilot Program for Affordable
Credit-Building Opportunities and including recommendations
regarding whether the program should be continued after January
1, begin delete 2015 end delete begin insert 2016 end insert .

(b) The information disclosed to the commissioner for the
commissioner’s use in preparing the report described in this section
is exempted from any requirement of public disclosure by
paragraph (2) of subdivision (d) of Section 6254 of the Government
Code.

(c) If there is more than one licensee approved to participate in
the program under this article, the report required pursuant to
subdivision (a) shall state information in aggregate so as not to
identify data by specific licensee.

(d)  The report required pursuant to this section shall include,
but not be limited to, the following:

(1) The number of finance lender licensees who applied to
participate in the program.

(2) The number of finance lender licensees accepted to
participate in the program.

(3) The number of program loan applications received by lenders
participating in the program, the number of loans made pursuant
to the program, the total amount loaned, and the distribution of
interest rates and principal amounts upon origination among those
loans.

(4) The number of borrowers who obtained more than one
program loan.

(5) Of the number of borrowers who obtained more than one
program loan, the percentage of those borrowers whose credit
scores increased between successive loans, based on information
from at least one major credit bureau, and the average size of the
increase.

(6) The income distribution of borrowers, including the number
of borrowers who obtained at least one program loan and who
resided in a low-to-moderate-income census tract at the time of
their loan application.

(7) The number of borrowers who obtained loans for the
following purposes, based on borrower responses at the time of
their loan applications indicating the primary purpose for which
the loan was obtained:

(A) Medical.

(B) Other emergency.

(C) Vehicle repair.

(D) Vehicle purchase.

(E) To pay bills.

(F) To consolidate debt.

(G) To build or repair credit history.

(H) To finance a purchase of goods or services other than a
vehicle.

(I) Other.

(8) The number of borrowers who have a bank account, the
number of borrowers who have a bank account and use
check-cashing services, and the number of borrowers who do not
have a bank account.

(9) The number and type of finders used by all licensees, the
amount of finder’s fees paid by the type of finder, and the relative
performance of loans consummated by finders compared to the
performance of loans consummated without a finder.

(10) The number and percentage of borrowers who obtained
one or more program loans on which late fees were assessed, the
total amount of late fees assessed, and the average late fee assessed
by dollar amount and as a percentage of the principal amount
loaned.

(11) The quality of underwriting and performance of loans under
this article consistent with the reporting standards applicable to
other loans and financial products, including, but not limited to,
credit cards and deferred deposit transactions.

(12) The number of times the commissioner found that a finder
or licensee had violated this article.

(13) The number of times that the commissioner disqualified a
finder from performing services, barred a finder from performing
services at one or more specific locations of the finder, terminated
a written agreement between a finder and a licensee, or imposed
an administrative penalty.

(14) Recommendations for improving the program.

(15) Recommendations regarding whether the program should
be continued after January 1, begin delete 2015 end delete begin insert 2016 end insert .

(e) The commissioner shall conduct a random sample survey
of borrowers who have participated in the program to obtain
information regarding the borrowers’ experience and licensees’
compliance with this article. The results of this survey shall be
included in the report required by this section.

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begin insert SEC. 2. end insert   

end insert

begin insert Section 22362 of the end insert begin insert Financial Code end insert begin insert is amended to
read: end insert

22362.  

This article shall remain in effect only until January 1,
begin delete 2015, end delete begin insert 2016, end insert and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, begin delete 2015, end delete begin insert 2016, end insert deletes or
extends that date.

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begin insert SEC. 3. end insert   

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begin insert The Legislature finds and declares that Sections 1 and
2 of this act impose a limitation on the public’s right of access to
documents in the possession of a public agency within the meaning
of Section 3 of Article I of the California Constitution. Pursuant
to that constitutional provision, the Legislature makes the following
finding to demonstrate the interest protected by this limitation and
the need for protecting that interest: end insert

begin insert

The nondisclosure of information provided to the Deputy
Commissioner of Business Oversight for the Division of
Corporations is necessary to protect the proprietary information
of the finance lenders participating in the Pilot Program for
Affordable Credit-Building Opportunities.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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begin delete

SECTION 1.  

Section 22201 of the Financial Code is amended
to read:

22201.  

“Charges” include any profit or advantage of any kind
that a licensee may contract for, collect, receive, or obtain by a
collateral sale, purchase, or agreement, in connection with
negotiating, arranging, making, or other act in connection with
any loan.

end delete