Connecticut Revises Consumer Credit Licensing Provisions

Connecticut recently passed Public Act 18-173 making changes to its licensing requirements and expanding the Department of Banking Commissioner’s enforcement powers and authority.  The Act applies to both mortgage and nonmortgage entities and streamlines various requirements among each licensing regime.

The Act revises and implements new licensing requirements for many licensees including mortgage lenders, mortgage correspondent lenders, mortgage brokers or originators, mortgage servicers, small loan lenders, lead generators, loan processors, and check cashers.  Licensees are generally required to clearly display their unique identifier, including on internet websites and in all audio solicitations.  The Act makes additional alterations to Connecticut’s rules regarding licensee advertising, including revisions related to third-party website requirements.  Further, branch managers and qualified individuals are now responsible for licensee actions and must reside within 100 miles of their respective offices, unless the Commissioner is otherwise satisfied the supervision requirement is met under the Act.  The Act also provides for additional in-state office requirements for some entities, such as debt negotiators.  Language regarding minimum licensing standards across each of the different licenses Connecticut provides is standardized under the Act as well.  Finally, licensing fees are revised and notification, renewal, and reporting dates are changed under the Act.

Provisions regarding the Commissioner’s enforcement and examination powers were also expanded and altered.  Under the Act, the Commissioner may “access, receive, and use any records, information, or evidence,” including “criminal, civil, and administrative history . . . , independent credit reports, and any other records he or she deems relevant” for the “purposes of issuing, renewing, suspending, conditioning, revoking, or terminating any license issued.”  Access and possession of the records of an entity or person under investigation can now be controlled by the Commissioner.  Finally, the Commissioner may order a licensee to remove any individual from “office and from employment or retention as an independent contractor” if certain conditions are met.

Most provisions and changes under the Act are effective October 1, 2018.  Record retention provisions and the provisions regarding the display of unique identifiers in advertisements take effect on July 1, 2019.

Connecticut’s House Bill can be found here.