The Department of Financial Protection and Innovation (DFPI) has recently completed the final regulation for implementing and interpreting certain sections of the California Consumer Financial Protection Law (CCFPL) related to commercial financial products and services. As revealed by Orrick, Herrington & Sutcliffe LLP, the regulatory approval came after considering public comments and putting forth three rounds of modifications to Sections 1060, 1061, and 1062 of the CCFPL.
Among other provisions, the final regulation will offer protections to small businesses seeking loans by defining and prohibiting unfair, deceptive, and abusive acts and practices (UDAAP). This action aims to create a safer and more transparent environment for small businesses that need financial assistance, particularly in a challenging economic climate.
Previously, corporate law professionals were concerned with the regulatory grey area associated with UDAAPs, but the latest amendments by the DFPI bring a new level of clarity. These legislative changes will undoubtedly require corporate financial departments and legal teams to revisit their existing policies and ensure their practices are compliant with the new requirements. With the final regulatory now approved, businesses must prepare for its enactment and the resulting changes to commercial financial products and services.
The finalized DFPI regulation underscores the continuous evolution of consumer financial protection laws and regulations in California, setting a precedent that other states may follow. As this new regulation becomes enforceable, corporate legal teams need to stay up to date with these developing regulations to ensure their firms remain compliant and mitigate the risk of potential legal issues.