CA DFPI provides assurance of no action to debt collection license applicants experiencing NMLS delays
Free Article Limit This Month
The California Department of Financial Protection and Innovation (DFPI) has published a notice on its website concerning delays that debt collectors and buyers seeking to comply with the new licensing requirement in the state's Debt Collection Licensing Act are currently experiencing.
The new law, passed in September 2020, requires debt collectors and buyers to apply for a DFPI license by December 31, 2021. It allows a debt collector or buyer that submits an application by that date to continue to operate pending the approval or denial of the application. However, if a debt collector or buyer applies for a license after December 31, it cannot operate in California until its license has been issued. Moreover, the DFPI has previously stated that it can take legal action against persons that continue operating without having submitted an application. Applications must be submitted via the Nationwide Multistate Licensing System and Registry (NMLS).
In its notice, the DFPI states that it is aware that there has been a temporary slowdown in obtaining a new NLMS account and that "[w]ith various DFPI year-end deadlines, the NMLS team is experiencing an unprecedented volume of account requests." The DFPI "acknowledges the predicament this puts entities in who are trying to comply with the new debt collector licensing requirement to apply for a license by Dec. 31, 2021" and states that it "would like to assure you that DFPI is aware of this issue and will not take any action against a debt collector solely on the basis of the temporary slowdown with NMLS." (emphasis in original).
It is important to note that the DFPI's no-action assurance is limited to debt buyers and applicants who attempt to apply for a license by December 31 but are unable to obtain a new NMLS account by December 31. The DFPI states in the notice that it is "working cooperatively with the NMLS team to be able to verify those that have attempted to apply."
Debt collectors and buyers expecting to do business in California, and who have not yet submitted an NMLS application, can do so here.
ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.
Accept
My
Account
