The Assembly Banking and Finance Committee on Oct. 26 passed SB 825 (presented by the Senate pro tem designee) to the Appropriations Committee. Supporters said the bill clarifies the Department of Financial Protection and Innovation's authority to remedy legal violations against California consumers directly under state law and argued the change is needed after recent federal shifts in enforcement.

The bill's sponsor told the committee the measure does not create new obligations for financial institutions but allows the DFPI to "say to a licensee, hey, stop. You are driving in a dangerous manner that is injuring consumers," if the agency determines a violation has occurred. Andrew Kushner of the Center for Responsible Lending said the change is meant to fill a gap left by the Consumer Financial Protection Bureau's reduced enforcement, and Ed Howard, representing the office of Kat Taylor, said the law would apply longstanding legal concepts such as unfair, deceptive and abusive acts and practices (UDAAP) to licensees under state authority.

Banking and industry representatives registered opposition or asked for amendments. Kevin Gould of the California Bankers Association and several other trade groups said SB 825 sidesteps federal notice procedures designed to coordinate enforcement with the CFPB and could duplicate existing enforcement tools the state already has for licensees. The California Mortgage Bankers Association proposed an alternative approach that would permit DFPI to pursue certain remedies administratively but limit them to remedies already available under the relevant licensing law. Several community bank and credit-union groups also registered opposition while signaling a willingness to work on amendments.

Committee members asked whether the state's existing licensing laws and the attorney general's authority were insufficient; proponents responded that federal UDAAP authority and the CFPB's ability to intervene in cases are distinct and that recent federal retrenchment makes a state-level enforcement backstop necessary to protect consumers.

The committee voted to pass SB 825 and refer it to the Appropriations Committee.