Installment Loans

TRANSFER OF INDUSTRIAL LOAN PROGRAM TO THE DEPARTMENT

Governor Kemp signed Senate Bill 462 into law on June 30, 2020, and it went into effect on July 1, 2020.  The bill was introduced by Senator John Kennedy and sponsored in the House by Representative Bruce Williamson.  The bill transferred the regulation of consumer installment loans of $3,000 or less (“installment loans”) from the Office of the Insurance Commissioner to the Department of Banking and Finance (“Department”).

The Department appreciates the faith placed in it by the Governor and the General Assembly in transferring the regulation of these consumer loans to the Department.  The Department is also grateful for the trust shown by both the industry and the consumer advocates in actively supporting the transfer.  In the regulation of non-depository financial institutions, the Department is directed to ensure that licensees operate in compliance with state law, consumer interests are protected, and economic and technological progress takes place in the industry.  It is the Department’s view that all of these objectives can be obtained if industry, consumer advocates, and the Department are willing to work together to modernize the applicable regulations and the offering of these loans within the State.  Everyone at the Department is excited about regulating a new industry and looks forward to partnering with the interested parties to meet the challenge of successfully transferring the program.

The primary motivation in transferring the regulation of installment loans to the Department was to obtain efficiencies in the regulation of the industry and, as a result, the bill makes numerous statutory changes. At a high-level, the bill does not change the general operations of the industry such as the permissible interest rate and charges, the loan cap, or the taxation rate on interest.  Instead, it changes the regulatory and administrative processes that apply to the industry.  Generally speaking, the bill overlays the regulatory processes that apply to the other non-depository businesses licensed by the Department – residential mortgage businesses and money service businesses- and applies them to the installment lending business. 

Some of the most significant revisions are:

  1. Utilizing the Nationwide Multistate Licensing System and Registry (“NMLS”) for the receipt and processing of applications;
  2. Accepting electronic payments of fees and taxes as well as supporting documentation;
  3. Increasing the reporting of information by licensees to the Department;
  4. Eliminating the requirement that each location of an entity have a separate license; and
  5. Providing that the Department shall conduct examinations on a maximum interval of five years.

The Department strongly encourages every regulated entity to review the bill to ensure a thorough understanding of all the applicable revisions.  Senate Bill 462 can be viewed at: http://www.legis.ga.gov/Legislation/20192020/194666.pdf .

There will obviously be a transition period in moving the regulation of installment loans to the Department, but the Department’s goal is to fully integrate the program as soon as possible.  

The Department will work with the industry in this interim period to continue to allow it to offer installment loans to Georgia consumers in an efficient manner that protects consumer interests.  If there are any questions or concerns related to implementation during this interim period, please do not hesitate to contact [email protected].  Your inquiry will be responded to in a timely manner.

This is a very exciting time for the Department.  We look forward to being exposed to a new industry and to tackling any challenges that arise in this process in order to fully achieve the goals of the legislation.

KEVIN B. HAGLER

Commissioner