Bill Text: CA AB2251 | 2015-2016 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Student loan servicers: licensing and regulation:
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2016-09-29 - Chaptered by Secretary of State - Chapter 824, Statutes of 2016. [AB2251 Detail]
Download: California-2015-AB2251-Amended.html
Bill Title: Student loan servicers: licensing and regulation:
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2016-09-29 - Chaptered by Secretary of State - Chapter 824, Statutes of 2016. [AB2251 Detail]
Download: California-2015-AB2251-Amended.html
BILL NUMBER: AB 2251 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 19, 2016
AMENDED IN SENATE AUGUST 1, 2016
AMENDED IN SENATE JUNE 13, 2016
AMENDED IN ASSEMBLY MAY 31, 2016
AMENDED IN ASSEMBLY MAY 10, 2016
AMENDED IN ASSEMBLY APRIL 20, 2016
AMENDED IN ASSEMBLY MARCH 28, 2016
INTRODUCED BY Assembly Member Mark Stone
(Coauthors: Assembly Members Dababneh and Gonzalez)
(Coauthor: Senator Leno)
FEBRUARY 18, 2016
An act to add Division 12.5 (commencing with Section 28100) to the
Financial Code, relating to student loan servicers.
LEGISLATIVE COUNSEL'S DIGEST
AB 2251, as amended, Mark Stone. Student loan servicers: licensing
and regulation: Student Loan Servicing Act.
(1) Existing law establishes the Department of Business Oversight
as headed by the Commissioner of Business Oversight, who, among other
things, generally provides for the licensure and regulation of
persons who are engaged in various consumer financial businesses,
including, but not limited to, the business of making consumer or
commercial loans.
This bill would enact the Student Loan Servicing Act providing for
the licensure, regulation, and oversight of student loan servicers
by the commissioner and would define terms for its purposes. The bill
would prohibit a person from acting as
engaging in the business of servicing a student loan
servicer in this state, directly or indirectly,
without a license, unless exempt from the licensing requirement, and
would require a licensee to provide specific services to a student
loan borrower and comply with reporting, auditing, and other
oversight by the commissioner. The bill would require a person
applying for a license to, among other things, pay an application
fee, sign the application under penalty of perjury, and submit to a
criminal background check by the Department of Justice. By expanding
the scope of the crime of perjury and increasing who is authorized to
receive criminal record information, this bill would impose a
state-mandated local program. The bill would require each licensee
to to, among other things, file reports with
the commissioner under oath, pay to the commissioner its pro
rata share of all costs and expenses reasonably incurred in the
administration of these provisions, as estimated by the commissioner,
and would authorize the commissioner to enforce these provisions by,
among other things, promulgating regulations, performing
investigations, suspending a license, and enforcing the
provisions in a an administrative
hearing or in court, as specified. The bill would prohibit
the public disclosure of specific information provided by a licensee
to the commissioner. The bill would make the act operative on July 1,
2018, except for specific authorizations to the commissioner which
may be exercised on and after January 1, 2017. The bill would make
legislative findings in support of its provisions.
(2) 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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(3)Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
This bill would make legislative findings to that effect.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Student loan debt is a national crisis. More than 40,000,000
people individuals in the United States
owe some amount of student educational loan debt.
Total student educational loan debt in
the United States currently exceeds $1.2 trillion, surpassing both
the amount of credit card debt and car loans. With college costs
continuing to rise, student educational loan
debt continues to rise, and there is no reduction in sight.
(b) While California's financial aid programs are some of the
strongest in the nation and our state's college graduates have among
the lowest educational student loan
debt burdens, California students and graduates still incur
significant debt. According to the Institute for College Access &
Success, 55 percent of California's graduating class of 2014 has
student educational loan debt. According to the
United States Department of Education, as of January 2015, there are
approximately 4,156,000 student educational loan
borrowers in California, and the total student educational
loan debt outstanding for Californians is approximately
$1.2 billion.
(c) Student educational loan debt is a
hindrance on the state's economy, preventing borrowers from achieving
financial independence, buying property, and starting businesses.
(d) Student educational loan servicers
administer student loans, serving as a critical link between
borrowers and lenders in managing accounts, processing payments, and
communicating directly with borrowers. Despite this critical
relationship, according to the federal Consumer Financial Protection
Bureau (CFPB), there are no consistent, marketwide federal standards
for student educational loan servicing.
(e) The CFPB released a report in September 2015 that found that
student educational loan borrowers encounter
servicers that discourage borrower-friendly alternative payment
plans, fail to respond to questions and payment processing errors,
and fail to provide sufficient information to borrowers regarding
payments, benefits, interest rates, and other charges.
(f) It is the intent of the Legislature to promote all of the
following:
(1) Meaningful access to federal affordable repayment and loan
forgiveness benefits.
(2) Reliable information about student educational
loans and loan repayment options.
(3) Quality customer service and fair treatment.
SEC. 2. Division 12.5 (commencing with Section 28100) is added to
the Financial Code, to read:
DIVISION 12.5. Student Loan Servicing Act
CHAPTER 1. GENERAL PROVISIONS
Article 1. Short Title
28100. This division may be known and cited as the "Student Loan
Servicing Act."
Article 2. Requirement for License
28106. 28102. (a) A
No person shall only engage
in the business of servicing a student loan within
in this state, directly or indirectly, as
without first obtaining a licensee
license pursuant to this division. A license
shall not be transferable or assignable.
(b) Notwithstanding subdivision (a), any of the following shall
not be required to be a licensee to engage in servicing a student
loan within this state:
(b) This division shall not apply to any of the following:
(1) A bank, trust company, or industrial loan company doing
business under the authority of, or in accordance with, a license,
certificate, or charter issued by the United States or any state,
district, territory, or commonwealth of the United States that is
authorized to transact business in this state.
(2) A federally chartered savings and loan association, federal
savings bank, or federal credit union that is authorized to transact
business in this state.
(3) A savings and loan association, savings bank, or credit union
organized under the laws of this or any other state that is
authorized to transact business in this state.
(4) A public postsecondary educational institution or a
private nonprofit postsecondary educational institution
servicing a student loan it extended to the borrower.
(5) A person who is licensed in good standing pursuant to the
California Finance Lenders Law (Division 9 (commencing with Section
22000)) and services student loans pursuant to Section 22340.
(5) A nonprofit community service organization that meets all the
criteria of Section 12104.
(c) A private postsecondary educational institution not exempted
from the requirements of this division pursuant to subdivision (b)
shall not be required to comply with this division for the servicing
of a student loan it extended to a borrower that a licensee is
servicing pursuant to a servicing agreement with the private
postsecondary educational institution for that student loan.
Article 3. Definitions
28108. 28104. For the purposes of
this division, the following terms have the following meanings:
(a) "Applicant" means a person applying for a license pursuant to
this division.
(b) "Borrower" means either of the following:
(1) A person who has received or agreed to pay a student loan.
(2) A person who shares responsibility for repaying a student loan
with a person described in paragraph (1).
(c) "Commissioner" means the Commissioner of Business Oversight.
(d) "Department" means the Department of Business Oversight.
(e) "Engage in the business" means, without limitation, servicing
student loans.
(f) "In this state" means any activity of a person relating to
servicing student loans that originates from this state and is
directed to persons outside this state, or that originates from
outside this state and is directed to persons inside this state, or
that originates inside this state and is directed to persons inside
this state.
(g) "Licensee" means a person licensed pursuant to this division.
(h) "Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust, an unincorporated
organization, a government, or a political subdivision of a
government, and any other entity.
(i) "Qualified written request" means a written correspondence
made by a borrower, other than notice on a payment medium supplied by
a licensee, that is transmitted by mail, facsimile, or
electronically through an email address or Internet Web site
designated by the licensee to receive communications from a borrower
that does all of the following:
(1) Enables the licensee to identify the name and account of the
borrower.
(2) Includes a statement of the reasons for the belief by the
borrower, to the extent applicable, that the account is in error or
that provides sufficient detail to the servicer regarding information
sought by the borrower, such as a complete payment history for the
loan or the borrower's account, a copy of the borrower's student loan
promissory note, or the contact information for the creditor to whom
the borrower's student loan is owed.
(j) "Servicing" means any of the following activities related to a
student loan of a borrower:
(1) Performing both of the following:
(A) Receiving any scheduled periodic payments from a borrower or
any notification that a borrower made a scheduled periodic payment.
(B) Applying payments to the borrower's account pursuant to the
terms of the student loan or the contract governing the servicing.
(2) During a period when no payment is required on a student loan,
performing both of the following:
(A) Maintaining account records for the student loan.
(B) Communicating with the borrower regarding the student loan on
behalf of the owner of the student loan promissory note.
(3) Interacting with a borrower related to that borrower's student
loan, with the goal of helping the borrower avoid default on his or
her student loan or facilitating the activities described in
paragraph (1) or (2).
(k) (1) "Student loan" means any loan
primarily for use to finance a postsecondary education and costs of
attendance at a postsecondary institution, including, but not limited
to, tuition, fees, books and supplies, room and board,
transportation, and miscellaneous personal expenses. A "student
loan" includes a loan made to refinance a student loan.
(2) (A) A "student loan" shall not include an extension of credit
under an open-end consumer credit plan, a reverse mortgage
transaction, a residential mortgage transaction, or any other loan
that is secured by real property or a dwelling.
(B) A "student loan" shall not include an extension of credit made
by a postsecondary educational institution to a borrower if one of
the following apply:
(i) The term of the extension of credit is no longer than the
borrower's education program.
(ii) The remaining, unpaid principal balance of the extension of
credit is less than $1,500 at the time of the borrower's graduation
or completion of the program.
(iii) The borrower fails to graduate or successfully complete his
or her education program and has a balance due at the time of his or
her disenrollment from the postsecondary institution.
(l) "Student loan servicer" means any person engaged in the
business of servicing student loans.
CHAPTER 2. LICENSING
Article 1. Commissioner of Business Oversight
28110. 28106. (a) The commissioner
shall administer the provisions of this division and may promulgate
rules and regulations and issue orders consistent with that
authority.
(b) Without limitation, the functions, powers, and duties of the
commissioner include all of the following:
(1) To issue or refuse to issue a license as provided by this
division.
(2) To revoke or suspend for cause any license as provided by this
division.
(3) To keep records of licenses issued under this division.
(4) To receive, consider, investigate, and act upon complaints
made in connection with a licensee.
(5) To prescribe the forms of and receive (A) applications for
licenses and (B) reports, books, and records required to be made by a
licensee under this division, including annual audited financial
statements.
(6) To subpoena documents and witnesses and compel their
attendance and production, to administer oaths, and to require the
production of books, papers, or other materials relevant to any
inquiry authorized by this division.
(7) To require information with regard to an applicant that the
commissioner may deem necessary, with regard for the paramount public
interest in ascertaining the experience, background, honesty,
truthfulness, integrity, and competency of an applicant for servicing
student loans, and if an applicant is an entity other than an
individual, in ascertaining the honesty, truthfulness, integrity, and
competency of an officer or director of the corporation,
association, or other entity, or the members of a partnership.
(8) To enforce by order any provision of this division.
(9) To levy fees, fines, and charges in an amount sufficient to
cover the cost of the services performed in administering this
division, as set forth by rule. division.
(10) To appoint examiners, attorneys, supervisors,
experts, and special assistants as needed to effectively and
efficiently administer this division.
28112. 28108. (a) The commissioner
shall have the authority to conduct investigations and examinations
of an applicant or licensee as follows:
(1) For purposes of determining whether an applicant is eligible
for a license, or that a licensee is complying with the provisions of
this division or any regulation or order of the commissioner, the
commissioner may access, receive, and use any books, accounts,
records, files, documents, information, or evidence, including, but
not limited to, any of the following relating to the intent to, or
the practice of, servicing student loans for borrowers:
(A) Criminal, civil, and administrative history information.
(B) Personal history and experience information, including, but
not limited to, independent credit reports obtained from a consumer
credit reporting agency.
(C) Any other documents, information, or evidence that the
commissioner deems relevant to the inquiry or investigation
regardless of the location, possession, control, or custody of those
documents, information, or evidence.
(2) For the purposes of investigating violations or complaints
arising under this division, the commissioner may direct, subpoena,
or order the attendance of, and examine under oath, any person whose
testimony may be required about the student loan or account of the
borrower.
(b) In making any examination or investigation authorized by this
section, the commissioner may control access to any documents and
records of the licensee or person under examination or investigation.
The commissioner may take possession of the documents and records or
place a person in exclusive charge of the documents and records in
the place where they are usually kept. During the period of control,
no person shall remove or attempt to remove any of the documents and
records except pursuant to a court order or with the consent of the
commissioner. Unless the commissioner has reasonable grounds to
believe the documents or records of an applicant
a licensee have been, or are at risk of being, altered or
destroyed for purposes of concealing a violation of this division,
the licensee or owner of the documents and records shall have access
to the documents or records as necessary to conduct its ordinary
business affairs.
28114. 28110. (a) Notwithstanding
any other law, the commissioner may by rule or order prescribe
circumstances under which to accept electronic records or electronic
signatures. This section shall not be deemed to require the
commissioner to accept electronic records or electronic signatures.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Electronic record" means an initial license application, or
material modification of that license application, and any other
record created, generated, sent, communicated, received, or stored by
electronic means. "Electronic records" also includes, but is not
limited to, all of the following:
(A) An application, amendment, supplement, and exhibit, filed for
any license, consent, or other authority.
(B) A financial statement, report, or advertising.
(C) An order, license, consent, or other authority.
(D) A notice of public hearing, accusation, and statement of
issues in connection with any application, license, consent, or other
authority.
(E) A proposed decision of a hearing officer and a decision of the
commissioner.
(F) The transcripts of a hearing and correspondence between a
party and the commissioner directly relating to the record.
(G) A release, newsletter, interpretive opinion, determination, or
specific ruling.
(H) Correspondence between a party and the commissioner directly
relating to any document listed in subparagraphs (A) to (G),
inclusive.
(2) "Electronic signature" means an electronic sound, symbol, or
process attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign the
electronic record.
(c) The Legislature finds and declares that the Department of
Business Oversight has continuously implemented methods to accept
records filed electronically, and is encouraged to continue to expand
its use of electronic filings to the extent feasible, as budget,
resources, and equipment are made available to accomplish that goal.
Article 2. Application for License
28116. 28112. An applicant shall
apply for a license by submitting all of the following to the
commissioner:
(a) A completed application for a license in a form prescribed by
the commissioner and signed under penalty of perjury.
(b) The sum of one hundred dollars ($100) as a fee for
investigating the application, plus the cost of fingerprint
processing and the criminal history record check under Section
28118, 28116, and two
three hundred dollars ($200)
($300) as an application fee. The investigation fee,
including the amount for the criminal history record check, and the
application fee are not refundable if an application is denied or
withdrawn.
(c) Financial Audited financial
statements prepared in accordance with generally accepted accounting
principles and acceptable to the commissioner that indicate a net
worth of at least two hundred fifty thousand dollars ($250,000).
28118. 28114. (a) The commissioner
shall submit to the Department of Justice fingerprint images and
related information required by the Department of Justice of every
applicant for a license for purposes of obtaining information as to
the existence and content of a record of state or federal
convictions, state or federal arrests, and information as to the
existence and content of a record of state or federal arrests for
which the Department of Justice establishes that the person is free
on bail or on his or her own recognizance pending trial or appeal.
(b) When received, the Department of Justice shall forward to the
Federal Bureau of Investigation requests for federal summary criminal
history information received pursuant to this section. The
Department of Justice shall review the information returned from the
Federal Bureau of Investigation and compile and disseminate a
response to the commissioner.
(c) The Department of Justice shall provide a response to the
commissioner pursuant to paragraph (1) of subdivision (p) of Section
11105 of the Penal Code.
(d) The commissioner shall request from the Department of Justice
subsequent arrest notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for the license applicant
described in subdivision (a).
(e) The Department of Justice shall charge the applicant
a fee a fee, payable by the applicant,
sufficient to cover the costs of processing the requests pursuant to
this section.
28120. 28116. (a) Upon the filing of
an application for a license pursuant to Section 28116
28112 and the payment of the fees, the
commissioner shall investigate the applicant and its general partners
and persons individuals owning or
controlling, directly or indirectly, 10 percent or more of the
outstanding interests or any person responsible for the conduct of
the applicant's servicing activities within
in this state, if the applicant is a partnership. If the
applicant is a corporation, trust, limited liability company, or
association, including an unincorporated organization, the
commissioner shall investigate the applicant, its principal officers,
directors, managing members, and persons
individuals owning or controlling, directly or indirectly, 10
percent or more of the outstanding equity securities or any person
responsible for the conduct of the applicant's servicing activities
within in this state.
(b) Upon the filing of an application for a license pursuant to
Section 28130 28126 and the payment of
the fees, the commissioner shall investigate the person responsible
for the servicing activity of the licensee at the new location
described in the application. The investigation may be limited to
information that was not included in prior applications filed
pursuant to this division. If the commissioner determines that the
applicant has satisfied this division and does not find facts
constituting reasons for denial, the commissioner shall issue and
deliver a license to the applicant.
(c) For the purposes of this section, "principal officers" shall
mean president, chief executive officer, treasurer, and chief
financial officer, as may be applicable, and any other officer with
direct responsibility for the conduct of the applicant's servicing
activities within the in this state.
28122. 28118. The commissioner
shall, when the application is complete, including having received
the information from the Department of Justice, either grant a
license pursuant to this division or provide a written explanation
for the denial.
28124. 28120. (a) The proceedings
for a denial of a license shall be conducted in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code.
(b) The commissioner may deny an application for a license for any
of the following reasons:
(1) The applicant made a false statement of a material fact on the
application.
(2) The applicant or an individual specified in Section
28120 28116 within the last 10 years of the date
of application has committed any act involving dishonesty, fraud, or
deceit, or has been convicted of, or pleaded nolo contendere to, a
crime substantially related to the qualifications, functions, or
duties related to servicing.
(3) The applicant or an individual specified in Section
28120 28116 has violated any provision of this
division.
28126. 28122. (a) The commissioner
may deem an application for a license abandoned if the applicant
fails to respond to any request for information required by the
commissioner or department during an investigation of the
application.
(b) The commissioner shall notify the applicant, in writing, that
if the applicant fails to submit responsive information no later than
60 days after the date the commissioner sent the written request for
information, the commissioner shall deem the application abandoned.
(c) An application fee paid prior to the date an application is
deemed abandoned shall not be refunded. Abandonment of an application
pursuant to this subdivision shall not preclude the applicant from
submitting a new application and fee for a license.
28128. 28124. A license shall remain
effective until the license is either suspended or revoked by the
commissioner or surrendered by the licensee.
CHAPTER 3. LICENSEE DUTIES
28130. 28126. (a) A licensee shall
notify the commissioner, in writing, of any change in the information
provided in the application for a license, as applicable, not later
than 10 business days after the occurrence of the event that results
in the information becoming inaccurate or incomplete.
(b) (1) If a licensee seeks to change its place of business to a
street address other than that designated in its license, the
licensee shall provide notice to the commissioner at least 10 days
prior to the change. The commissioner shall notify the licensee
within 10 days if the commissioner disapproves the change, and if the
commissioner does not notify the licensee of disapproval within 10
days, the change in address shall be deemed approved.
(2) If notice is not given at least 10 days prior to the change of
a street address of a place of business, as required by subdivision
(b), or notice is not given at least 10 days prior to engaging in
the business of servicing student loans at a
new location, the commissioner may assess a civil or administrative
penalty on the licensee not to exceed five hundred dollars ($500).
28132. 28128. (a) A licensee
seeking to engage in the business of servicing student loans
at a new location shall submit an application for a branch
office license to the commissioner at least 10 days before engaging
in the business of servicing student loans at a new
location and pay the fee required by Section 28116.
28112.
(b) The licensee may engage in the business of servicing
student loans at the new location 10 days after the date of
submission of a branch office application.
(c) (1) The commissioner shall approve or deny the person
responsible for engaging in the business of servicing at the new
location in accordance with Article 2 of Chapter 2 (commencing with
Section 28116), 28112), and shall
notify the licensee of this decision within 90 days of the date of
receipt of the application.
(2) If the commissioner denies the application, the licensee
shall, within 10 days of the date of receipt of notification of the
commissioner's denial, submit a new application to the commissioner
designating a different person responsible for engaging in the
business of servicing at the new location. The commissioner shall
approve or deny the different person as provided in paragraph (1).
(d) A licensee shall not engage in the business of
servicing student loans at a new location in a name other than
a name approved by the commissioner.
(e) A branch office license to engage in the business of servicing
at a new location shall be issued in accordance with this section. A
change of street address of a place of business designated in a
license shall be made in accordance with Section 28130
28126 and shall not constitute a new location
subject to the requirements of this section.
28134. 28130. A licensee shall do
all of the following:
(a) Develop policies and procedures reasonably intended to promote
compliance with this division.
(b) File with the commissioner any report required by
regulation or order of the commissioner.
(c) Comply with the provisions of this division and any regulation
or order of the commissioner.
(d) Submit to periodic examination by the commissioner as required
by this division and any regulation or order of the commissioner.
(e) Advise the commissioner of filing a petition for bankruptcy
within five days of the filing.
(f) Comply with any other requirement established by regulation or
order of the commissioner.
(g)
(f) Provide, free of charge on its Internet Web site,
information or links to information regarding repayment and loan
forgiveness options that may be available to borrowers and provide
this information or these links to borrowers via written
correspondence or email at least once per calendar year.
(h)
(g) (1) Respond to a qualified written request by
acknowledging receipt of the request within five business days and
within 30 business days, to the extent possible,
provide information relating to the request and, if applicable, the
action the licensee will take to correct the account or an
explanation for the licensee's position that the borrower's account
is correct.
(2) The 30-day period described in paragraph (1) may be extended
for not more than 15 days if, before the end of the 30-day period,
the servicer
licensee notifies the borrower of the extension
and the reasons for the delay in responding.
(3) During the 60-business-day period starting on the date the
servicer received a qualified written request related to a dispute on
borrower's payments, a servicer shall not provide adverse
information regarding any payment that is the subject of the
qualified written request to any consumer reporting agency.
(i)
(3) After receipt of a qualified written request related to a
dispute on a borrower's payment on a student loan, a licensee shall
not, for 60 days, furnish adverse information to any consumer
reporting agency regarding any payment that is the subject of the
qualified written request.
(h) (1) Except as provided in federal law or required
by a student loan agreement, a servicer
licensee shall inquire of a borrower how to apply an
overpayment to a student loan. A borrower's direction on how to apply
an overpayment to a student loan shall stay in effect for any future
overpayments during the term of a student loan until the borrower
provides different directions.
(2) For purposes of this subdivision, "overpayment" means a
payment on a student loan in excess of the monthly amount
due from a borrower on a student loan on a monthly basis,
loan, also commonly referred to as a prepayment.
28135. 28132. (a) A licensee shall
not be required to comply with the requirements of subdivision
(h) (g) of Section 28134,
28130, if the licensee reasonably determines
that any of the following apply:
(1) A qualified written request is substantially the same as a
qualified written request previously made by the borrower, for which
the licensee has previously complied with its obligation to respond
pursuant to subdivision (h) (g) of
Section 28134, 28130, unless the
borrower provides new and material information to support the more
recent qualified written request. New and material information means
information that was not reviewed by the licensee in connection with
a prior qualified written request submitted by the same borrower and
that is reasonably likely to change the licensee's prior response
related to that request.
(2) A qualified written request is overbroad. A qualified written
request is overbroad if the licensee cannot reasonably determine from
the qualified written request the specific error that the borrower
asserts has occurred on his or her account or the specific
information the borrower is requesting related to his or her account.
To the extent a licensee can reasonably identify a valid assertion
of an error or valid request for information in a qualified written
request that is otherwise overbroad, the licensee shall comply with
the requirements of subdivision (h) (g)
of Section 28134 28130 with respect to
that valid asserted error or request for information.
(3) A qualified written request is delivered to the licensee more
than one year after the licensee sells, assigns, or transfers the
servicing of the student loan that is the subject of the qualified
written request to another servicer.
(b) If, pursuant to subdivision (a), a licensee determines that it
is not required to comply with the requirements of subdivision
(h) (g) of Section 28134,
28130, the licensee shall notify the borrower of
the determination, and the basis for its determination, in writing
not later than five business days after making such determination.
28136. 28134. (a) If the sale,
assignment, or other transfer of the servicing of a student loan
results in a change in the identity of the party to whom the borrower
is required to send payments or direct any communications concerning
the student loan the licensee shall notify the borrower in writing
at least 15 days before the borrower is required to send a payment on
the student loan of all of the following:
(1) The identity of the new student loan servicer and the number
of the license of the new student loan servicer issued by the
commissioner.
(2) The name and address of the new student loan servicer to whom
subsequent payments or communications are required to be sent.
(3) The telephone numbers and Internet Web sites of the new
student loan servicer.
(4) The effective date of the sale, assignment, or transfer.
(5) The date on which the licensee, as the current student loan
servicer, will stop accepting payments on the borrower's student
loan.
(6) The date on which the new student loan servicer will begin
accepting payments on the borrower's student loan.
(b) A licensee shall transfer all information regarding a
borrower, a borrower's account, and a borrower's student loan to the
new licensee servicing the borrower's student loan within 45 calendar
days.
28140. 28136. The licensee shall
not do any of the following:
(a) Directly or indirectly employ any scheme, device, or artifice
to defraud or mislead a borrower.
(b) Engage in any unfair or deceptive practice toward any borrower
or misrepresent or omit any material information in connection with
the servicing of a student loan, including, but not limited to,
misrepresenting the amount, nature, or terms of any fee or payment
due or claimed to be due on a student loan, the terms and conditions
of the student loan agreement, or the borrower's obligations under
the student loan.
(c) Misapply payments made by a borrower to the outstanding
balance of a student loan.
(d) Fail If the licensee is required to or
voluntarily reports to a consumer reporting agency, fail to
accurately report each borrower's payment performance to at least one
consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis, upon acceptance as a data furnisher
by that consumer reporting agency. For purposes of this subdivision,
a consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis is one that meets the definition in
Section 603(p) of the federal Fair Credit Reporting Act (15
USC U.S.C. Sec. 1681a(p)).
(e) Refuse to communicate with an authorized representative of the
borrower who provides a written authorization signed by the
borrower, provided the licensee may adopt procedures reasonably
related to verifying that the representative is in fact authorized to
act on behalf of the borrower.
(f) Negligently or intentionally make any false statement or
knowingly and willfully make any omission of a material fact in
connection with any information or reports filed with the
commissioner, the department, or another governmental agency.
28142. 28138. Notwithstanding
subdivision (b) of Section 28136, 28134 and
unless prohibited by federal law, a licensee shall retain and
maintain its records of servicing a borrower's student loan for a
minimum of three years after the student loan has been sold,
transferred, assigned, assigned, transferred,
or paid in full.
28144. 28140. A licensee shall
continuously maintain a minimum net worth of at least two hundred
fifty thousand dollars ($250,000).
28146. 28142. (a) A licensee shall
maintain a surety bond in accordance with this section in a minimum
amount of twenty-five thousand dollars ($25,000). The bond shall be
payable to the commissioner and issued by an insurer authorized to do
business in this state. An original surety bond, including any and
all riders and endorsements executed subsequent to the effective date
of the bond, shall be filed with the commissioner within 10 days of
execution. For licensees with multiple licensed locations, only one
surety bond is required. The bond shall be used for the recovery of
expenses, fines, and fees levied by the commissioner in accordance
with this division or for losses or damages incurred by borrowers as
the result of a licensee's noncompliance with the requirements of
this division.
(b) When an action is commenced on a licensee's bond, the
commissioner may require the filing of a new bond. Immediately upon
recovery of any action on the bond, the licensee shall file a new
bond. Failure to file a new bond within 10 days of the recovery on a
bond, or within 10 days after notification by the commissioner that a
new bond is required, constitutes sufficient grounds for the
suspension or revocation of the license.
(c) The commissioner may by rule require a
higher bond amount for a licensee based on the dollar amount of
servicing of student loans by that licensee.
28148. 28144. (a) Each licensee
shall pay to the commissioner its pro rata share of all costs and
expenses reasonably incurred in the administration of this division,
as estimated by the commissioner, for the ensuing year and any
deficit actually incurred or anticipated in the administration of the
division in the year in which the assessment is made. The pro rata
share shall be the proportion that a licensee's servicing activities
within in this state bears to the costs
and expenses remaining after the amount assessed pursuant to
subdivision (c).
(b) On or before the 30th day of September in each year, the
commissioner shall notify each licensee of the amount assessed and
levied against it and that amount shall be paid by October 31. If
payment is not made by October 31, the commissioner shall assess and
collect a penalty, in addition to the assessment, of 1 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
(c) In the levying and collection of the assessment, a licensee
shall neither be assessed for nor be permitted to pay less than two
hundred fifty dollars ($250) per licensed location per year.
(d) If a licensee fails to pay the assessment on or before the
31st day of October, the commissioner may by order summarily suspend
or revoke the license issued to the licensee. If, after an order is
made, a request for hearing is filed in writing within 30 days, and a
hearing is not held within 60 days thereafter, the order is deemed
rescinded as of its effective date. During any period when the
license is revoked or suspended, a licensee shall not engage in the
business of servicing student loans within in
this state pursuant to this division except as may be
permitted by order of the commissioner. However, the revocation,
suspension, or surrender of a license shall not affect the powers of
the commissioner as provided in this division.
(e) The commissioner shall, by rule, establish the timelines,
fees, and assessments applicable to applicants for licenses under
this division.
28150. 28146. (a) (1)
A licensee shall file an annual report with the
commissioner, on or before the 15th day of March, giving the relevant
information that the commissioner reasonably requires concerning the
business and operations conducted by the licensee within
in the state during the preceding calendar year,
including information regarding the number of loans that are sold,
assigned, or transferred to another party. The individual annual
reports filed pursuant to this section shall be made available to the
public for inspection except, upon request in the annual
report to the commissioner, the balance sheet contained in the annual
report of a sole proprietor or any other nonpublicly traded persons.
inspection. The report shall be made under oath
and in the form prescribed by the commissioner.
(2) "Nonpublicly traded person" for purposes of this section means
persons with securities owned by 35 or fewer individuals.
(b) A licensee shall make other special reports that may be
required by the commissioner.
28151. 28148. (a) At the end of the
licensee's fiscal year, but in no case more than 12 months after the
last audit conducted pursuant to this section, each licensee shall
cause its books and accounts to be audited by an independent
certified public accountant. The audit shall be sufficiently
comprehensive in scope to permit the expression of an opinion on the
financial statements prepared in accordance with generally accepted
accounting principles and shall be performed in accordance with
generally accepted auditing standards. The audit shall include a
reconciliation of the licensee's trust accounts as of the audit date.
(b) "Expression of an opinion" includes (1) an unqualified
opinion, (2) a qualified opinion, (3) a disclaimer of opinion, or (4)
an adverse opinion. If a financial statement, report, certificate,
or opinion of the independent certified public accountant is in any
way qualified, the commissioner may require the licensee to take any
action that the commissioner deems appropriate to address the
qualification. The commissioner may reject any financial statement,
report, certificate, or opinion by notifying the licensee or other
person required to make the filing of the rejection and the reason
therefor. Within 30 days after the receipt of the notice, the
licensee or other person shall correct the deficiencies. Failure to
correct the deficiencies is a violation of this division. The
commissioner shall retain a copy of all financial statements,
reports, certificates, or opinions so rejected.
(c) If a qualified or adverse opinion is expressed or if an
opinion is disclaimed, the reasons therefor shall be fully explained.
(d) The audit report shall be filed with the commissioner within
105 days of the end of the licensee's fiscal year. The report filed
with the commissioner shall be certified by the certified public
accountant conducting the audit. The commissioner may
promulgate rules regarding late audit reports.
(e) If a licensee required to make an audit fails to cause an
audit to be made, the commissioner may cause the audit to be made by
an independent certified public accountant at the licensee's expense.
The commissioner shall select the independent certified public
accountant by advertising for bids or by other fair and impartial
means that the commissioner establishes by rule.
means. The commissioner may summarily revoke the license
of a licensee who fails to file a certified financial statement
prepared by an independent certified public accountant as required by
this division or at the request of the commissioner.
28152. 28150. A licensee that
ceases to service student loans to borrowers shall inform the
commissioner in writing and surrender the license and all other
indicia of license to the commissioner. The commissioner may require
a licensee to file a plan for the disposition of the servicing
business that includes, but is not limited to, a closing audit. Upon
receipt of the written notice and plan, if required, the commissioner
shall determine whether the licensee has violated this division. The
commissioner shall give a licensee notice of accepting a surrendered
license, and a license shall not be deemed surrendered until the
commissioner accepts its tender in writing.
CHAPTER 4. ADMINISTRATION AND POWER OF THE COMMISSIONER
28154. 28152. (a) As often as the
commissioner deems necessary and appropriate, but at least once every
36 months, the commissioner shall examine the affairs of each
licensee for compliance with this division. The commissioner shall
appoint suitable persons to perform the examination. The commissioner
and his or her appointees may examine the books, records, and
documents of the licensee, and may examine the licensee's officers,
directors, employees, or agents under oath regarding the licensee's
operations. The commissioner may cooperate with any agency of the
state, the federal government, or other states. The
commissioner may accept an examination conducted by one of these
entities in place of an examination by the commissioner under this
law, unless the commissioner determines that the examination does not
provide information necessary to enable the commissioner to fulfill
his or her responsibilities under this division.
(b) Unless otherwise exempt pursuant to Section 28106,
28102, affiliates of a licensee are subject to
examination by the commissioner on the same terms as the licensee,
but only when reports from, or examination of, a licensee provides
documented evidence of unlawful activity between a licensee and
affiliate benefitting, affecting, or arising from the activities
regulated by this division.
(c) The cost of each examination of a licensee shall be paid to
the commissioner by the licensee examined, and the commissioner may
maintain an action for the recovery of the cost in any court of
competent jurisdiction. In determining the cost of the examination,
the commissioner may use the estimated average hourly cost for all
persons performing examinations of licensees or other persons subject
to this division for the fiscal year.
(d) The statement of the findings of an examination shall belong
to the commissioner and shall not be disclosed to anyone other than
the licensee, law enforcement officials, or other state or federal
regulatory agencies for further investigation and enforcement.
Reports required of licensees by the commissioner under this division
and results of examinations performed by the commissioner under this
division are the property of the commissioner.
(e) The commissioner shall provide a written statement of the
findings of the examination, issue a copy of that statement to
each licensee's principals, officers, or directors,
the licensee and take appropriate steps to
ensure correction of any violations of this division.
(f) Notwithstanding any provision of this division, the
commissioner shall have the authority to waive one or more branch
office examinations, if the commissioner deems that the branch office
examinations are not necessary for the protection of the public, due
to the centralized operations of the licensee or other factors
acceptable to the commissioner.
CHAPTER 5. ENFORCEMENT
28158. 28154. (a) If a licensee
fails to do either of the following, the commissioner shall impose a
penalty in a sum of up to one hundred dollars ($100) for every day:
(1) To make any report required by law or by the commissioner
within 10 days from the day designated for the making of the report,
or within any extension of time granted by the commissioner.
(2) To include therein any matter required by law or by the
commissioner.
(b) The commissioner may by order summarily suspend or revoke the
license if a licensee fails to file any report required by this
division.
28156. (a) The commissioner may, after appropriate notice and
opportunity for hearing, by order, censure or suspend for a period
not exceeding 12 months, or bar from any position of employment,
management, or control of any licensee, or any other person, if the
commissioner finds either of the following:
(1) That the censure, suspension, or bar is in the public interest
and that the person has committed or caused a violation of this
division or rule or order of the commissioner, which violation was
either known or should have been known by the person committing or
causing it or has caused material damage to the licensee or to the
public.
(2) That the person has been convicted of or pleaded nolo
contendere to any crime, or has been held liable in any civil action
by final judgment, or any administrative judgment by any public
agency, if that crime or civil or administrative judgment involved
any offense specified in subdivision (b) of Section 50317, or any
other offense reasonably related to the qualifications, functions, or
duties of a person engaged in the business in accordance with the
provisions of this division.
(b) Within 15 days from the date of a notice of intention to issue
an order pursuant to subdivision (a), the person may request a
hearing under the Administrative Procedure Act (Chapter 5 (commencing
with Section 11500) of Division 3 of Title 2 of the Government
Code). Upon receipt of a request, the matter shall be set for hearing
to commence within 30 days after such receipt unless the person
subject to this division consents to a later date. If no hearing is
requested within 15 days after the mailing or service of such notice
and none is ordered by the commissioner, the failure to request a
hearing shall constitute a waiver of the right to a hearing.
(c) Upon receipt of a notice of intention to issue an order
pursuant to this section, the person who is the subject of the
proposed order is immediately prohibited from engaging in any
servicing.
(d) Persons suspended or barred under this section are prohibited
from participating in any business activity of a licensee and from
engaging in any business activity on the premises where a licensee is
servicing.
(e) This section shall apply to any violation, conviction, plea,
or judgment occurring at any time prior to and after the enactment of
this section.
28160. (a) If the commissioner has a reasonable basis to believe
that a licensee is violating or failing to comply with this division
or any regulation or order of the commissioner, or servicing student
loans in an unsafe or injurious manner, then the commissioner may
direct the licensee to comply with the law by an order issued by the
commissioner. The order shall require the licensee to show cause
before the commissioner, at a time and place to be fixed by the
commissioner, as to why the order should not be observed.
(b)
28158. If, after investigation, the commissioner has
reasonable grounds to believe that a licensee is conducting business
in an unsafe or injurious manner, the commissioner shall, by written
order addressed to the licensee, direct the discontinuance of the
unsafe or injurious practices. The order shall be effective
immediately, but shall not become final except in accordance with the
provisions of Section 21866. 28164.
28162. 28160. Whenever, in the
opinion of the commissioner, a person is engaged in the business of
servicing student loans within in this
state, either actually or through subterfuge, without a license from
the commissioner, the commissioner may order that person to desist
and refrain. If, within 30 days after an order is served, a request
for a hearing is filed in writing and the hearing is not held within
60 days of the filing, the order is rescinded. This section does not
apply to persons exempted under subdivision (b) of Section
28106. 28102.
28164. 28162. If, after
investigation, the commissioner has reasonable grounds to believe
that a licensee has violated its articles of incorporation
or any law or rule binding upon it, is failing to
comply with this division or any regulation or order of the
commissioner, the commissioner shall, by written order
addressed to the licensee, direct the discontinuance of the
violation. failure to comply. The order shall be
effective immediately, but shall not become final except in
accordance with the provisions of Section 28166.
28164.
28166. 28164. (a) No order issued
pursuant to this chapter may become final except after notice to the
affected licensee of the commissioner's intention to make the order
final and of the reasons for the finding. The commissioner shall also
notify the licensee that upon receiving a request, the matter will
be set for hearing to commence within 15 business days after receipt.
The licensee may consent to have the hearing commence at a later
date. If no hearing is requested within 30 days after the mailing or
service of the required notice, and none is ordered by the
commissioner, the order may become final without hearing and the
licensee shall immediately discontinue the practices named in the
order. If a hearing is requested or ordered, it shall be held in
accordance with the provisions of the Administrative Procedure Act
(Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code), and the commissioner shall have all
of the powers granted under that act. If, upon the hearing, it
appears to the commissioner that the licensee is conducting business
in an unsafe and injurious manner or is violating its
articles of incorporation or any law of this division, or any rule
binding upon it, failing to comply with this division
or any regulation or order of the commissioner, the
commissioner shall make the order of discontinuance final and the
licensee shall immediately discontinue the practices named in the
order.
(b) The licensee has 10 days after an order is made final to
commence an action to restrain enforcement of the order. If the
enforcement of the order is not enjoined within 10 days by the court
in which the action is brought, the licensee shall comply with the
order.
(c) The commissioner may immediately revoke the licensee's license
if the licensee fails to comply with any order issued under this
division. The commissioner shall not revoke the license if, within 10
days from the effective date of the revocation order, the licensee
secures a court order restraining the enforcement of the commissioner'
s revocation order.
28168. (a)
28166. The commissioner may issue an order suspending
or revoking a license if, after notice and an opportunity for
hearing, the commissioner finds any of the following:
(1)
(a) The licensee is violating this division or a
regulation adopted or an order issued under this division.
(2)
(b) The licensee does not cooperate with an examination
or investigation by the commissioner.
(3)
(c) The licensee engages in fraud, intentional
misrepresentation, or gross negligence in servicing a student loan.
(4)
(d) The competence, experience, character, or general
fitness of the licensee, an individual specified in Section
28120, 28116, or any person responsible for
servicing a student loan for the licensee indicates that it is not in
the public interest to permit the licensee to continue servicing
student loans.
(5) The licensee
engages in an unsafe or unsound practice.
(e) The licensee engages in unsafe or injurious practice.
(6)
(f) The licensee is insolvent, suspends payment of its
obligations, or makes a general assignment for the benefit of its
creditors.
(7)
(g) Any fact or condition exists that, if it had
existed at the time the licensee applied for the license, would have
been grounds for denying the application.
(b) In determining whether a licensee is engaging in an unsafe or
unsound practice, the commissioner may consider the size and
condition of the licensee's provision of servicing, the magnitude of
the loss, the gravity of the violation of this division, and the
previous conduct of the persons involved.
28170. 28168. (a) If, after
investigation, the commissioner has reasonable grounds to believe
that a person has engaged or is about to engage in any act or
practice constituting a violation of any provision of this division
or any rule or order hereunder, the commissioner may bring an action
to enjoin the acts or practices or to enforce compliance with this
division or any rule or order adopted under this division. The action
shall be brought in the name of the people of the State of
California in the superior court. Upon a proper showing, a permanent
or preliminary injunction, restraining order, or writ of mandate
shall be granted. A receiver, monitor, conservator, or other
designated fiduciary or officer of the court, which may include the
commissioner, may be appointed for the defendant or the defendant's
assets. Any other ancillary relief may be granted as appropriate.
A receiver, monitor, conservator, or other designated fiduciary or
officer of the court appointed by the superior court pursuant to
this section may, with the approval of the court, exercise any or all
of the powers of the defendant's officers, directors, partners,
trustees, or persons who exercise similar powers and perform similar
duties. The powers include the filing of a petition for bankruptcy.
No action at law or in equity may be maintained by any party against
the commissioner, or a receiver, monitor, conservator, or other
designated fiduciary or officer of the court, by reason of their
exercising these powers or performing these duties pursuant to the
order of, or with the approval of, the superior court.
(b) If the commissioner determines it is in the public interest,
the commissioner may include in any action authorized by subdivision
(a) a claim for ancillary relief. The ancillary relief may include,
but not be limited to, restitution or disgorgement or damages on
behalf of the persons injured by the act or practice constituting the
subject matter of the action. The court shall have jurisdiction to
award additional relief.
28171. (a) If, upon inspection, examination, or investigation,
the commissioner has cause to believe that a licensee or a person is
violating or has violated any provision of this division or any rule
or order thereunder, the commissioner or his or her designee may
issue a citation to that licensee or person in writing, describing
with particularity the basis of the citation. Each citation may
contain an order to correct the violation or violations identified
and provide a reasonable time period or periods by which the
violation or violations must be corrected. In addition, each citation
may assess an administrative fine not to exceed two thousand five
hundred dollars ($2,500) that shall be deposited in the State
Corporations Fund. In assessing a fine, the commissioner shall give
due consideration to the appropriateness of the amount of the fine
with respect to factors including the gravity of the violation, the
good faith of the person or licensees cited, and the history of
previous violations. A citation issued and a fine assessed pursuant
to this section, while constituting punishment for a violation of
law, shall be in lieu of other administrative discipline by the
commissioner for the offense or offenses cited, and the citation and
fine payment thereof by a licensee shall not be reported as
disciplinary action taken by the commissioner.
(b) Notwithstanding subdivision (a), nothing in this section shall
prevent the commissioner from issuing an order to desist and refrain
from engaging in a specific business or activity or activities, or
an order to suspend all business operations to a person or licensee
who is engaged in or who has engaged in continued or repeated
violations of this division. In any of these circumstances, the
sanctions authorized under this section shall be separate from, and
in addition to, all other administrative, civil, or criminal
remedies.
(c) If, within 30 days from the receipt of the citation, the
person cited fails to notify the department that the person intends
to request a hearing pursuant to Section 28176, the citation shall be
deemed final.
(d) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative fine and an
order compelling the cited person to comply with the order of the
commissioner. The application, which shall include a certified copy
of the final order of the commissioner, shall constitute a sufficient
showing to warrant the issuance of the judgment and order.
28170. (a) If, upon inspection, examination or investigation,
based upon a complaint or otherwise, the department has cause to
believe that a person is engaged in the business of servicing student
loans without a license, or a licensee or person is violating any
provision of this division or any rule or order thereunder, the
department may issue a citation to that person in writing, describing
with particularity the basis of the citation. Each citation may
contain an order to desist and refrain and an assessment of an
administrative penalty not to exceed two thousand five hundred
dollars ($2,500). All penalties collected under this section shall be
deposited in the State Corporations Fund.
(b) The sanctions authorized under this section shall be separate
from, and in addition to, all other administrative, civil, or
criminal remedies.
(c) If within 30 days from the receipt of the citation the person
cited fails to notify the department that the person intends to
request a hearing as described in subdivision (d), the citation shall
be deemed final.
(d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code, and in all states
the commissioner has all the powers granted therein.
(e) After the exhaustion of the review procedures provided for in
this section, the department may apply to the appropriate superior
court for a judgment in the amount of the administrative penalty and
order compelling the cited person to comply with the order of the
department. The application, which shall include a certified copy of
the final order of the department, shall constitute a sufficient
showing to warrant the issuance of the judgment and order.
28172. (a) Any person who violates a provision of this division,
or any rule or order under this division, shall be liable for a civil
penalty not to exceed two thousand five hundred dollars ($2,500) for
each violation. This penalty shall be assessed and recovered in a
civil action brought in the name of the people of the State of
California by the commissioner in any court of competent
jurisdiction.
(b) As applied to the penalties for acts in violation of this
division, the remedies provided by this section and by other sections
of this division are not exclusive, and may be sought and employed
in any combination to enforce the provisions of this division.
28174. (a) The commissioner may refer the evidence that is
available concerning any violation of this division or of any rule or
order adopted under this division to the district attorney of the
county in which the violation occurred. The district attorney may,
with or without the commissioner's referral, institute criminal
proceedings under this division. The commissioner and his or her
counsel, deputies, or assistants may, upon request of the district
attorney, assist the district attorney in presenting the law or facts
at the trial.
(b) After an examination, investigation, or hearing under this
division, if the commissioner deems it of public interest or
advantage, he or she may certify a record to the proper prosecuting
official of the county or city in which the act complained of,
examined, or investigated occurred.
28176. All hearings provided for in this division shall be
conducted in accordance with the provisions of Chapter 5 (commencing
with Section 11500) of Part 1 of Division 3 of Title 2 of the
Government Code. The commissioner has all the powers granted therein.
CHAPTER 6. MISCELLANEOUS
28178. If any provision of this division or the application
thereof to any person or circumstances is held invalid, illegal, or
unenforceable, such invalidity, illegality, or unenforceability shall
not affect other provisions or applications of this division that
can be given effect without the invalid, illegal, or unenforceable
provision or application, and, to this end, the provisions of this
division are declared to be severable.
28180. The rights and remedies provided in this division are in
addition to any other rights and remedies provided by law.
28181. 28182. This division shall
become operative on July 1, 2018. The commissioner may take any
necessary actions to exercise the authority pursuant to
subdivision (a) of Section 28110, this division to
prepare for the July 1, 2018, operative date on and after
January 1, 2017.
SEC. 3. 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.
SEC. 4. The Legislature finds and declares that Section 2 of this
act, which adds Sections 28150 and 28154
Section 28152 to the Financial Code, imposes a limitation on
the public's right of access to the meetings of public bodies or the
writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation and
the need for protecting that interest:
Protecting from public disclosure limited confidential information
provided by licensees to the Commissioner of Business Oversight
properly balances protecting legitimate private economic interests
and public interests in effective regulation.
