CA Prorater Bill No. 2524 Passed Initial Vote in Assembly Committee on Banking and Finance; Bill will Return to Committee for Further Revisions

REGULATORY UPDATE

On May 19, 2020, the CA Prorater Bill No. 2524 Passed Initial Vote in Assembly Committee on Banking and Finance; Bill will Return to Committee for Further Revisions.

On Tuesday, May 19, 2020, CA Prorater Bill No. 2524 was debated in the Assembly Committee on Banking and Finance. The Bill’s sponsor, Assemblywoman Buffy Wicks, expressed her original intent for proposing the Bill. The Assemblywoman further explained her desire not to include language in the proposed Bill that would harm good actors in the debt settlement industry.

In her position in favor of this Bill, Assemblywoman Wicks elaborated that she does not want this Bill to essentially remove all debt settlement companies from doing business in California. To the contrary, the Assemblywoman, being somewhat sympathetic to the industry, hopes to create a “surgical, strategic Bill that protects the good actors in the sector while removing the bad actors.” 

Furthermore, Assemblywoman Wicks has been working with parties in opposition to the Bill to amend and strike provisions that are currently viewed as unacceptable to the debt settlement industry.

At the May 19th hearing the Assemblywoman and the parties in opposition had already agreed to:

  • Strike the “voiding contract provision” from the proposed Bill, 
  • Strike the “percent on the ability to pay a standard provision” from the proposed Bill,
  • Continue working together to find a more practicable number for the fee cap. 

The opposition emphasized, through both written and oral testimony, that the proposed Bill’s 5% fee cap would run debt settlement companies out of California. Assemblywoman Wicks emphasized both her understanding of the oppositions concerns on the 5% fee cap, and her commitment to work together to come up with a more practicable, workable number. 

The Bill passed its initial vote in the Banking and Finance Committee, on a party-line 8(D)-3(R) vote. A few of the Committee-members who voted in favor of the Bill did so with verbal assurance from Assemblywoman Wicks that she would continue to work with the opposition in further amending the Bill. As it stands, the proposed Bill will be re-referred to the Committee, on a date that has yet to be scheduled, with more amendments and revisions to be voted on by the Committee. We will continue to keep you appraised on the existing situation. 

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