In September 2018, then Governor Jerry Brown signed SB 1235 into law. SB 1235 added a new division to the Financial Code imposing specific loan disclosure requirements on providers of commercial financings. These disclosures include:
- The total amount of funds provided;
- The total dollar cost of financing;
- The term or estimated term;
- The method, frequency, and amount of payments;
- A description of prepayment policies; and,
- Until January 1, 2024, the total cost of the financing expressed as an annualized rate.
The bill required the Department of Financial Protection & Innovation (then known as the Department of Business Oversight) to adopt regulations governing these disclosures. Cal. Fin. Code § 22804. Commercial financing providers are not required to comply with the new disclosure requirements until the Commissioner’s regulations are adopted and become effective. Cal. Fin. Code § 22804(c). Following four rounds of comments, the Department submitted its proposed rules to the Office of Administrative Law for review. The OAL is required to conduct a review of the Department’s rulemaking record to ensure that the agency satisfied the requirements of the California Administrative Procedure Act and OAL’s regulations. This review is scheduled to end this Friday, June 10. The OAL must either: (i) approve the Department’s rulemaking action and file the proposed regulation with the Secretary of State; or (ii) disapprove the rulemaking action. Cal. Gov’t Code § 11349.3.