The California Department of Financial Protection and Innovation plans to start issuing conditional licenses to companies that have applied under the state’s debt collection licensing law on January 1, 2023, and will end the safe harbor allowing companies that have applied for a license to continue to collect in the state at the same time, the agency announced yesterday during a virtual meeting of its Debt Collection Advisory Committee.
Licenses will be issued conditionally because the state is still working out a solution for how it will perform background checks and collect fingerprints from applicants, which are required under the law. The agency announced earlier this year that the issuance of licenses would be delayed because it was notified by the Federal Bureau of Investigation that changes were needed to the protocols for requesting federal background checks. The agency is still working through those changes, it said yesterday. But it did not want to hold up applications that have been submitted and are awaiting review and approval.
There are 1,300 applications that have been filed so far and about half of them have been assigned to examiners for review, said Melinda Lee, the DFPI’s Deputy Commissioner for Debt Collection Licensing, during the meeting. The plan, she said, is to start conditionally approving licenses in January. Those approvals will be done through the Nationwide Multistate Licensing System (NMLS).
Companies that submit applications prior to December 31, 2022 will still be allowed to collect while their applications are pending, Lee said. Companies that file applications after January 1, 2023 will have to wait until their license applications are approved before they can collect in the state, except in circumstances where the applicant is a new company, Lee said.
The DFPI is working on a process to identify new companies that file applications after January 1 to keep them from having to wait for their application to be approved prior to being able to collect. Companies that have been around for a while and wait to apply will not receive any special treatment, she said.
Lee also announced that applications to join the committee will be coming in the new year. Each of the members were chosen for two-year terms, which end in April.
