California proposes fintech regulation overhaul. License fees may also increase.

  • California’s Governor has included changes to fintech regulation in the state’s proposed budget for this year.
  • The changes are intended to improve consumer protection and may also help continue to improve California’s fintech ecosystem/reputation as a trusted headquarters for national and global fintech firms.
  • The proposed budget will now be reviewed by the California State Legislature.
  • California’s current financial services regulator – the Department of Business Oversight (the DBO) – would change its name to the Department of Financial Protection and Innovation (the DFPI).
  • The DFPI would establish a new California Consumer Financial Protection Law – with the primary aim being to protect consumers from unfair practices.
  • New activities of the DFPI would include: greater financial protection education (particularly for potentially vulnerable groups), licencing new industries that are currently unregulated, supporting fintech firms in the implementation of the new consumer financial protection law, and establishing a Financial Technology Innovation Office to help industry develop new products.
  • The staff size and budget of the DFPI would be increased.
  • Some currently unregulated activities may become licenced activities.
  • License fees may increase for existing licenses.