Wisconsin Assembly Bill AB617

Wisconsin 2023-2024 Regular Session

• Introduced: 11/2/23
• Refer: 11/2/23
• Report Pass: 1/18/24
• Refer: 1/18/24
• Failed: 4/15/24

Caption

The licensing and regulation by the Department of Financial Institutions of consumer lenders, payday lenders, money transmitters, sales finance companies, collection agencies, mortgage bankers and mortgage brokers, adjustment service companies, community currency exchanges, and insurance premium finance companies; the Nationwide Multistate Licensing System and Registry; modifying and repealing rules promulgated by the Department of Financial Institutions; and granting rule-making authority. (FE)

Impact

By modifying existing statutes, the bill enhances the regulatory authority of the DFI over licensed lenders and collection agencies. It allows DFI greater flexibility in suspending or revoking licenses based on violations or misconduct, which is crucial for maintaining industry standards and protecting consumers. Additionally, it imposes stricter timelines on collection agencies regarding the handling and remittance of collected funds, thus aiming to improve fiscal accountability within the industry. The overall intent is to enhance consumer protection while promoting fair lending practices.

Summary

Assembly Bill 617 aims to update and streamline the licensing and regulatory framework for various types of financial service providers, including consumer lenders, payday lenders, collection agencies, and others under the jurisdiction of the Department of Financial Institutions (DFI). A significant feature of the bill is the adoption of the Nationwide Multistate Licensing System and Registry (NMLSR) for administering these licensing functions, which is intended to create uniform procedures across the state. The bill establishes specific definitions for consumer loans and the responsibilities of licensed lenders, particularly regarding finance charges exceeding 18% per annum.

Contention

Notable points of contention surrounding AB617 include concerns from consumer advocacy groups about the potential for excessive fees associated with high-interest loans under the new regulatory framework. Critics argue that while seeking to regulate lending practices, the bill may create loopholes that limit consumer rights and protections, particularly in terms of debt collection and loan management. Moreover, some stakeholders within the financial service industry worry that the broadened authority granted to DFI could lead to inconsistency and unpredictability in enforcement, affecting business operations across the state.