Nancy Thomas and Calvin Funk authored an article for The Banking Law Journal looking at the core disclosure requirements of the regulations recently issued under California’s new commercial financing disclosure law and some of the key issues that providers will need to navigate as they prepare compliance disclosures. “The California Office of Administrative Law has approved the Department of Financial Protection and Innovation’s [DFPI] final regulations implementing California’s first-of-its-kind commercial financing disclosure law,” the authors wrote.

They added: “The Act requires a provider to give disclosures ‘at the time of extending a specific commercial financing offer.’ The Final Regulations provide further details, stating that this ‘time’ includes: (1) any time a specific commercial financing offer is quoted to a recipient, or (2) the time a recipient selects a specific commercial financing offer, if the recipient was given multiple offers at one time. A ‘specific commercial financing offer’ is a written communication to a recipient based on information from or about the recipient of specified financing information.”

“In response to comments, the DFPI explained that it intentionally deviated from and required disclosure earlier than the Truth in Lending Act, which requires disclosures prior to consummation. The DFPI acknowledged that this timing could require financers to provide multiple disclosures to the extent that financing terms change over time. The DFPI asserts that multiple disclosures to the same recipient will not create confusion because only the final version must be signed. However, the DFPI chose not to do any testing of the disclosures despite calls for it to do so, leaving the agency without any basis for this and other responses to comments.”

Read the full article.