The Virginia Bureau of Financial Institutions (the “Bureau”) recently sent members of the House and Senate Commerce and Labor Committees a letter reporting on the work of the legislative working group that met this year at the request of the legislature to examine issues related to consumer finance companies, internet lending, and open-end credit lenders. The letter states that the Bureau plans to develop proposed legislation for the 2018 session convening in January based on the study group meetings.
The key takeaways from the Bureau’s letter are as follows:
- The Bureau states that a “vast majority” of the study group members appeared supportive of requiring “out-of-state consumer finance companies” to be licensed and regulated under Virginia law. Thus, the Bureau’s legislation will likely include such licensing and regulatory provisions.
- The Bureau notes that there was no consensus for licensing open-end credit lenders. Currently, lenders offering open-end credit to Virginia consumers may do so without a license and little regulation, whether the lender is located in Virginia or outside the state. Because of opposition expressed in the study group to any change in current law on open-end credit, it would appear that this issue is unlikely to be addressed in the Bureau’s legislation.
- The Bureau further notes that while there was general consensus in support of “modernizing” the consumer finance company statutes in a number of places to conform to recent enactments in the titles governing payday lending and motor vehicle lending, there was not “significant support” for adding consumer protection protections found in those titles to the consumer finance company statutes.
Of course, the devil is always in the details, so we will have to wait to see the actual legislation to determine how lenders might be impacted. The Bureau’s legislation will likely be introduced sometime in December. We will report here on the details when it is.