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California DFPI Announces Conditional Licensing Process Starting in the New Year

Businesses must apply by Dec. 31, when the California DFPI licensing safe harbor ends, to continue operating while their licenses are reviewed.

10/28/2022 11:30 A.M.

3.5 minute read

Licenses from California’s Department of Financial Protection & Innovation will be issued on a conditional basis starting Jan. 1, 2023, beginning a new licensing process for the state as required by the Debt Collection Licensing Act.

The license process was announced at this month’s meeting of the DFPI Debt Collection Advisory Committee.

DFPI Deputy Commissioner Melinda Lee said during the meeting that they have received 1,300 applications and about half of those have been assigned to examiners in preparation for the conditional licenses coming Jan. 1.

Here is how it will work:

  • Conditional approval will be sent to the applicant’s primary contact through the Nationwide Multistate Licensing System (NMLS), where licensees will be listed.
  • A safe harbor for applicants ends Dec. 31, meaning any business that has not applied by that date will not be able to operate while their license is reviewed. The DFPI is reviewing options for new business applicants to have a safe harbor as to not hinder new ventures into the industry, Lee said.
  • When an applicant’s conditional license is approved, it will have a license number on NMLS, Lee said. The conditional approval will be pending background checks required as part of the licensing process and some applicants may need to submit new fingerprints. This spring, the Federal Bureau of Investigation informed the DFPI that new changes to state agency protocols are necessary for requesting federal background checks, ACA previously reported. DFPI Commissioner Clothilde V. Hewlett said the department can approve licenses while the background checks are pending and there is an extension from 60 to 90 days to complete fingerprints, if needed.

The DFPI frequently updates its website with answers to common questions. The department anticipates additional rulemaking to implement the licensing law, and encourages interested parties to subscribe to its email subscription service to receive notices of rulemaking actions.

The DFPI is available for more information at [email protected] or by calling (916) 327-7585.

The DFPI also recently launched an online portal for consumers and debt collection license applicants to search for their operation status while their application is being reviewed by the state. The new online portal has two options to look up your application or for consumers to search for a debt collector’s license, ACA previously reported.

Committee Plans in 2023

DFPI Debt Collection Advisory Committee members serve two-year terms and represent a diverse cross-section of stakeholders. Five are industry representatives, one is a consumer advocate, and one is a law and economics professor who studies the accounts receivable management (ARM) industry.

ACA members on the committee include Scott Hyman, attorney with Severson & Werson PC; Mark Naiman, president of Absolute Resolutions Corp.; Cindy Yaklin, president of States Recovery Systems Inc. and the California Association of Collectors Inc.; Tamar Yudenfreund, senior director, public policy at Encore Capital Group and chair of ACA’s Federal Affairs Committee; and Ohad Samet, president of TrueAccord Corp.

Additional committee members include Elizabeth Gonzalez, directing attorney with the Consumer Law Unit at the Public Law Center, and Prasad Krishnamurthy, professor of law at the University of California Berkeley School of Law.

Lee said during the meeting that the term for the inaugural committee members ends in April 2023.

The DFPI will start its process to seek new members for the committee in January and said current members are encouraged to apply.

Yaklin said she hoped the committee could meet in person to connect further before the end of the year and hold more frequent meetings. The committee currently does not have any meetings planned before the end of the year, Lee said.

Yaklin added that the more the committee can share about the work it’s doing, the better it is for members, the public and the ARM industry.

For more information on how the ACA licensing staff can assist with your licensing application completion needs, please contact us at [email protected] or call (952) 926-6547

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

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