The California Department of Business Oversight (the “CDBO”) has issued a new regulation that will eliminate a statutory licensing exemption under the California Finance Lenders Law (the “CFLL”) for nonbank operating subsidiaries and affiliates of banks (among other entities) that are engaged in lending and/or brokering consumer loans. The regulation will take effect on September 28, 2016.

Operating subsidiaries and affiliates engaged in lending and/or brokering commercial loans only will not be affected by this regulation, despite initial proposals by the CDBO to the contrary.