According to an online post by the California Department of Business Oversight, Gov. Gavin Newsom’s proposed 2020-21 state budget includes a component that would modify the state regulatory structure to “cement California’s consumer protection leadership amidst a retreat on that front by federal agencies including the Consumer Financial Protection Bureau.”
Should the changes happen, the post explained the moves would revamp the Department of Business Oversight to become the Department of Financial Protection and Innovation. According to officials, the purpose of this proposal is to accomplish six different objectives, including:
— Restore financial protections that have been “paralyzed” at the federal level
— Protect consumers from “predatory” businesses, without imposing undue burdens on “honest and fair” operators
— Spur, not stifle, innovation in financial services by clarifying regulatory expectations for emerging products and services
— Extend state oversight to important financial-services providers not currently subject to state supervision
— Increase public outreach and education, especially for vulnerable populations
— Provide more effective responses to consumer complaints
Officials also are looking to create an Office of Financial Technology Innovation, based in San Francisco, to study emerging technologies in financial services including virtual currencies, and to engage with California companies developing new financial products and services.
Regulators also want to promote innovations by amending the financial code to make California’s banking ecosystem a more viable option for new entrants.
Furthermore, officials are seeking to establish research units to anticipate trends in assessing new financial products and allow the department to “preemptively curb” practices that will harm consumers.
And finally, the agency is looking to find a new consumer protection ombudsperson.
Officials said they expect to fund the $44.3 million start-up costs in the first three years by using existing reserves.