BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 984 (Hueso) - Pilot Program for Increased Access to
Responsible Small Dollar Loans: extension
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|Version: February 10, 2016 |Policy Vote: B & F.I. 6 - 1, |
| | JUD. 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 2, 2016 |Consultant: Jolie Onodera |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 984 would repeal the January 1, 2018, sunset date
for the Pilot Program for Increased Access to Responsible Small
Dollar Loans, thereby making its provisions operative
indefinitely, as the Program for Increased Access to Responsible
Small Dollar Loans (Program).
Fiscal
Impact: Ongoing annual costs potentially in excess of $150,000
(Special Fund*) to the Department of Business Oversight (DBO) to
continue administrative and enforcement activities over the
Program, to be recovered through the authority to charge fees.
To the extent the removal of the sunset date fosters growth and
greater participation in the Program, the future costs of the
Program could potentially increase.
*State Corporations Fund
SB 984 (Hueso) Page 1 of
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Background: Existing law establishes, until January 1, 2018, the Pilot
Program for Increased Access to Responsible Small Dollar Loans
(Pilot Program) for the purpose of allowing greater access to
affordable installment loans in principal amounts of at least
$300 and less than $2,500. The Pilot Program, administered by
the Commissioner of Business Oversight, imposes specified limits
on the interest rates, charges, and fees that a licensee may
impose, as well as other program requirements.
In its statutorily mandated report entitled "Report of Activity
Under Small Dollar Loan Pilot Programs - Affordable Credit
Building Opportunities Pilot Program and Pilot Program for
Responsible Small Dollar Loans, January 1, 2011 through December
31, 2014, (June 2015)" the DBO issued the following
recommendations:
The current version of the small dollar pilot
program has been operational for just one year. The
DBO recommends policymakers give the program more
time to work before making changes. Recommendations
for improvements, at this time, would be premature.
The changes brought by the new program did double
the number of lenders participating in the program,
but the total remains less than 10. Additionally,
the revisions did not significantly affect the
amount of lending activity conducted by the
individual companies. The DBO will consult with
licensees, consumer advocates and policymakers to
explore ways to increase participation in the pilot
program by both lenders and borrowers.
Proposed Law: This bill would repeal the January 1, 2018,
sunset date on the Pilot Program for Increased Access to
Responsible Small Dollar Loans, thereby making its provisions
operative indefinitely. Additionally, this bill:
Strikes the word "pilot" from the Program's name.
Deletes the requirement that the commissioner include
recommendations regarding whether the Program should be
continued after January 1, 2018, in the report on Program
SB 984 (Hueso) Page 2 of
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utilization that is required to be submitted to the
Legislature by January 1, 2017.
Related
Legislation: SB 235 (Block) Chapter 505/2015 authorizes finders
under the Pilot Program to disburse loan proceeds to borrowers,
receive loan payments from borrowers, and provide notices and
disclosures to borrowers, as specified; increases allowable
finder compensation; and provides pilot program lenders greater
flexibility in the way(s) in which they compensate their
finders.
SB 318 (Hill) Chapter 467/2013 abolished the Pilot Program for
Affordable Credit-Building Opportunities, and, until January 1,
2018, established the Pilot Program for Increased Access to
Responsible Small Dollar Loans under the California Finance
Lenders Law.
SB 1146 (Florez) Chapter 640/2010 established the Pilot Program
for Affordable Credit Building Opportunities that allowed
licensees under the California Finance Lender Law to participate
in the pilot program involving unsecured consumer loans of less
than $2,500 until January 1, 2015.
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