Financial Code, 1951

A licensee must give the commissioner written notice before changing the business address or, for a mobile unit, the place or area of business.

Licensees must keep business records in good accounting form, keep them current at their main office, preserve them for at least four years, and make them available to the commissioner on demand during business hours.

Licensees must file audited financial reports and related information with the commissioner on set deadlines, and the commissioner can require additional reports, reject filings, extend deadlines, and exempt some filings.

The commissioner may investigate businesses and examine related books and records to discover violations of this division.

A licensee, or another person examined under this division, must pay the commissioner the cost of the examination.

The commissioner may require witnesses to attend and may examine people under oath in connection with an examination or investigation.

The commissioner may bring and pursue actions to stop violations of this division or related commissioner orders or decisions, and to enforce civil penalties under this division.

If the commissioner finds a licensee insolvent or operating unsafely, the commissioner may order it to stop disbursing funds and stop doing business.

The commissioner may take over a licensee’s property and business if certain problems are found, and may keep possession until the business resumes or is finally liquidated.

If the commissioner has taken over a licensee’s property and business, the commissioner may ask the superior court to appoint a receiver to liquidate the licensee’s affairs.

A licensee can be disciplined in California if it has been disciplined elsewhere for conduct substantially related to the regulated activity.

Licensees must post fee schedules and required notices, and they may not charge more than the posted fees.

A licensee may not sell checks payable to bearer, to cash, or to the purchaser. A licensee may sell an unnamed-payee check only if it does not exceed $150.

A licensee must not publish or share false, misleading, deceptive, or materially incomplete statements, or claims about supervision by California or its officials. The commissioner may order a licensee to stop violating conduct.

Agency agreements for these licensed check-selling businesses must be in writing, and the licensee cannot pay an agent any compensation for becoming an agent except what the written agreement specifies.

This section says the chapter does not authorize examining, inspecting, or auditing a client’s books and records while they are with a business agent unless the client expressly consents.

A prorater’s charges are capped, certain recurring-payment fees are allowed up to stated limits, an origination fee may be charged only in specified circumstances, the origination fee must be refunded if the debtor stays current for 12 months, and at least 70% of funds received must be paid to creditors each month.

A cancellation fee or termination penalty may not be charged to a debtor.

A prorater must not receive any fee unless the required creditor consent threshold is met.

A prorater must give written notice to listed creditors within five days after the contract’s effective date, and the notice must state the proposed monthly payment. The prorater-debtor contract must also list each debt to be prorated, the creditor’s name, and the total of those debts.

If a prorater charges more than the maximum allowed, and it is not due to an accidental and bona fide error, the prorater must void the debtor contract and return all charges received from the debtor.

A prorater must not purchase a debtor’s obligation from a creditor.

A prorater must not take certain signed instruments or security items, including blank contracts, negotiable instruments for charges, and judgment-related authorizations.

Contracts between a prorater and a debtor must include specified disclosures about debts, payments, charges, installments, and the parties’ names and addresses.

A prorater must give the debtor a copy of any contract or agreement immediately after the debtor signs it, and the prorater must sign the debtor’s copy.

A prorater must give a debtor a receipt for each payment, unless the payment was made by check or money order.

A prorater must give the debtor an accounting at least every six months and also within seven days after a written demand.

A prorater must not lend money or credit.

A prorater must not pay referral compensation or accept compensation from anyone other than the debtor for prorater activities.

A prorater must not pressure or require a debtor to buy or agree to buy any insurance policy.

A special prorater may not advertise or hold themselves out as a general prorater unless they have a valid, unrevoked general proraters license.

Proraters, and their owners, managers, or employees in prorating transactions, must not do things that count as practicing law.

A collection agency cannot be kept in the same premises as a prorating organization unless that prorating organization is exempt.

A prorater must not disclose a debtor’s creditor list to any individual or firm for the purpose of soliciting accounts.

The commissioner may make rules for the form and wording of advertising used by proraters.

Each prorater corporation must have at least one person with five years’ experience in consumer credit extension or credit collection activity, and at least one qualified person must be on duty at each open business location.

It is unlawful for any person to knowingly tamper with records or make an untrue statement to the commissioner under the stated conditions.

The commissioner may suspend or revoke a license after giving a reasonable opportunity to be heard if specified violations or conditions are found.

The commissioner may suspend any license for up to 30 days after three days’ notice and a hearing, while an investigation is pending.

The commissioner may summarily suspend or revoke a license if the licensee does not pay the required license fee within 10 days after notice. If a written hearing request is filed and the hearing is not held within 60 days, the order is rescinded.

Hearings under this division must follow the referenced Government Code chapter, unless this division sets a shorter time for setting the hearing; the commissioner has all powers granted there.

The commissioner’s orders, decisions, licenses, and other official acts may be reviewed under the law.

The commissioner may censure, suspend, or bar certain persons or organizations, and a person notified of a proposed order can request a hearing within 15 days.

This section defines “Commissioner” and “department” for this code.

This section defines key terms for the chapter on acquisition of control of banks, including “bank,” “control,” “controlling person,” “person,” and “shareholder.”

A person may not acquire control of a bank or related control person, or take certain steps toward doing so, unless the commissioner has approved the acquisition of control.

A person generally may not acquire control of an industrial bank, directly or indirectly, unless a stated exception applies.

An applicant to acquire control of a bank or controlling person must file an application in the form and with the information the commissioner requires, and must pay the applicable fee.

The commissioner must deny an acquisition-of-control application if any listed factor is true, and must approve it if none of the factors is true.

The commissioner may find that certain fraud- or dishonesty-related convictions make an acquiring person unsuitable to control a bank, or make a proposed management change unfair.

The commissioner may approve a control-acquisition proposal for a bank or controlling person and attach conditions the commissioner considers reasonable, necessary, or advisable in the public interest.

The commissioner may, for good cause, amend, alter, suspend, or revoke an approval related to a proposal to acquire control of a bank or controlling person.

An application to acquire control of a bank or controlling person is treated as approved if the commissioner does not deny or approve it within 60 days after filing, unless the applicant agrees to extend the period.

The commissioner may hold a hearing before deciding control issues or approving or denying an acquisition-of-control application, and must hold a hearing if a prejudiced person requests one in writing.

Some transactions may be exempted from Section 1251 if the commissioner exempts them by regulation or order.

If the commissioner believes someone has violated or is about to violate this chapter or related orders or regulations, the commissioner may ask the superior court for an injunction and other equitable relief.

A person may not vote or give written consent on a security acquired in violation of this chapter or related commissioner orders for three years after the acquisition.

If part of this chapter is invalid, illegal, or unenforceable, the rest still stands if it can work without the flawed part.

This section defines “person” to include a broad list of individuals, business forms, government entities, and similar organizations.

This section defines when a person or company is a bank holding company, mainly by ownership, control, or voting power over a bank, and excludes certain trust companies.

“Company” is defined to include a wide range of domestic or foreign business entities and similar organizations, whether incorporated or not.

This section defines when a company counts as a “subsidiary” of a specified bank holding company.

The commissioner may require reports from bank holding companies and their subsidiaries.

Bank holding companies and their subsidiaries are subject to examination by the commissioner.

For certain trust companies linked to a title insurance company, the commissioner must work with the Insurance Commissioner to adopt reasonable rules for inspections and examinations.

The commissioner is not authorized by this chapter to require reports from a national bank or to examine a national bank contrary to federal law.

Certain bank holding companies and qualifying subsidiaries are exempt from California’s constitutional interest-rate restrictions for specified obligations, loans, and forbearances.

The chapter’s definitions control how the Financial Institutions Law is construed, unless the provision or context requires otherwise.

This section defines “City” to include incorporated city, city and county, municipal corporation, municipality, town, and incorporated town.

Banks and affiliates may share fingerprints with law enforcement for criminal-history screening, must submit required fingerprint information to the Department of Justice, and must keep obtained criminal-history information confidential.

This section says California’s ATM safety division is meant to protect consumers and set the standard of care for ATM operators while not discouraging ATM placement in convenient locations.

Certain banks and related entities may sue a borrower for damages based on fraud in qualifying mortgage-related loans.

This section defines terms used in the ATM user safety division.

ATM operators must adopt procedures to evaluate ATM safety.

This section says the chapter does not create a duty to relocate or modify automated teller machines because of particular events or circumstances; instead, it sets a good-faith standard for evaluating all ATMs.

ATM operators must comply with Section 13041 when installing machines on or after July 1, 1991, and in some cases the person controlling the access or parking area must do so instead.

People responsible for an open, operating ATM must provide lighting at night and meet minimum brightness levels around the ATM and nearby areas.

Issuers of access devices must give customers basic ATM safety notices, usually by personal delivery or mail.

This section says the division’s ATM safety rules do not apply to certain ATMs, including some inside buildings and ATMs in areas not controlled by the operator.

This division overrides local rules about customer safety at automated teller machines in California.

ATM operators must disclose surcharges and related prices electronically before charging, and must let customers cancel in some cases.

Operators of point-of-sale devices may not charge a fee unless they disclose it to the customer before the customer has to pay, and the disclosure must appear on the device as a federally compliant label; some devices with electronic displays must also show an electronic disclosure.

Some point-of-sale devices must be accessible to visually impaired users, and manufacturers or distributors must offer compliant devices for sale in California.

ATM operators or owners may charge certain foreign-bank customers an access fee or surcharge, and agreements cannot block that right.

This section says any reference in this division to the voting of shares must be interpreted according to Section 111 of the Corporations Code.

Banks and trust companies may deal in real property only for specified business purposes, and exchanging property requires the commissioner's written approval.

Real property that is not held for permitted purposes must be sold when it can bring enough to reimburse the bank or trust company for losses tied to the loan or original investment. A bank or trust company also may not use retained real property to carry on unauthorized business, except as needed to orderly liquidate the debt.

Commercial banks may invest in real property and acquire stock in certain real-property-investment corporations, but they must apply to the commissioner first and stay within stated investment limits unless the commissioner approves a higher percentage.

Bank directors, officers, and employees must not take or agree to take personal commissions, gifts, or other value for helping someone get a loan or for allowing an overdraft.

A bank director, officer, agent, or employee commits a felony if they knowingly take or possess bank property, intend to defraud, and fail to make a full and true book entry or help omit a material entry.

A bank director, officer, agent, or employee commits a felony if they knowingly help make or publish a materially false report about the bank, or if they willfully fail to enter required book entries or allow the commissioner or examiners to inspect the books or take extracts.

A bank must not publish combined resources or liabilities with another bank unless the statement separately shows each bank’s resources and liabilities.

It is a misdemeanor to willfully and knowingly spread or help spread false statements or rumors about a bank’s financial condition, solvency, or financial standing.

Banks and trust companies may rent safe deposit boxes and hold property for safekeeping, but they must give customers a copy of certain agreements and cannot leave blank spaces for later filling in.

A bank may not buy certain property or related contracts involving an interested subject person unless its board approves first, and the price cannot exceed current market value.

If a bank’s articles change how many votes a share carries, the voting references in Sections 139 and 141 are read in terms of votes entitled to be cast. Disqualified shares are not counted as outstanding for quorum or the vote needed to approve the action.

A subject person of a bank may not buy the bank’s obligations or assets, directly or indirectly, unless the bank’s board approves and the price is at least current market value.

Banks are prohibited from acquiring or lending against certain bank or controlling-person securities, subject to listed exceptions.

Bank officers, directors, trustees, employees, or agents who willfully misapply or take bank property commit a felony; on conviction, the court must order full restitution to the bank.

A bank director in this state commits a misdemeanor if they participate in fraud during a fraudulent insolvency, or if they willfully do a legally forbidden act or omit a legal duty as director.

A bank officer or agent must not make or deliver a guaranty or endorsement for the bank if it could create liability beyond the bank’s legally allowed loans and discounts; doing so is a misdemeanor.

A bank director in this state must not join in a vote or act intended to make a prohibited loan or discount to a director, or on paper for which a director is liable, above the statutory limit.

Bank directors, trustees, officers, and employees may not place bank funds with another corporation on an understanding that it will make a loan or advance to specified persons.

Bank officers and employees must not intentionally hide certain interim loans, discounts, or securities transactions from the bank’s directors, and must report those items when required by law.

Bank officers, agents, tellers, clerks, and individual bankers commit a misdemeanor if they receive deposits while knowing the bank or banker is insolvent.

Bank officers and related personnel must not knowingly make false entries or tamper with bank records, and doing so with intent to deceive is a felony.

A bank may not become or act as a general partner, unless specifically authorized by law or by the commissioner.

A bank or its agent that has received the specified notice must not make a later vehicle-related assignment unless it simultaneously tells the assignee the notice information.

If this division requires a vote of each class of outstanding shares, that requirement must be interpreted under Section 117 of the Corporations Code.

This section says the article should be read to conform with Regulation O and related Federal Reserve interpretations, where applicable.

This section defines key terms used in the article, including “bank,” “company,” “executive officer,” “extension of credit,” “Regulation O,” and “subsidiary.”

This section adopts several Regulation O provisions for this article, changes some defined terms, and requires a bank to promptly report certain extensions of credit to its board.

A bank must not extend credit above the amount allowed under Regulation O to a company majority owned by the bank’s executive officers.

When a bank makes a credit extension covered by this article, it must follow all other applicable banking provisions in the division.

This section says Article 2 and Article 3 do not apply to a bank’s advance of money made under Section 317 of the Corporations Code.

A bank may make a loan for the benefit of a trust, even if the bank’s officers or directors are trustees of that trust.

Banks that make prohibited extensions of credit can face a civil penalty, and other people who knowingly make or procure such credit extensions can be guilty of a felony.

This section defines “approved by the board” as approval or ratification by the board vote, or by a committee vote if the committee has board powers, with listed exceptions.

This section defines “authorized agency activities” and “insured depository institution,” and lets the commissioner specify additional activities by order or regulation.

This chapter does not apply to certain California state banks acting as agents in authorized agency activities, except in a specific office-of-principal situation tied to Sections 1389 and 1396.

A California state bank and an affiliated insured depository institution can satisfy the prior approval requirement by filing a notice with the commissioner, if the commissioner does not object within the allowed time.

A California state bank may use an insured depository institution to carry out authorized agency activities as its agent, but only with prior approval from the commissioner and subject to any regulations the commissioner prescribes.

A California state bank must submit an application for approval in the required form, with the required information and signature, and must verify it if the commissioner requires verification.

A California state bank applying for approval must include a $250 filing fee.

When deciding whether to approve or deny this bank application, the commissioner must consider the listed factors.

A California state bank may not use an insured depository institution as its agent to do anything the bank itself is prohibited from doing.

An office of an insured depository institution is not treated as an office of a California state bank just because it performs authorized agency activities as agent for that bank under this article.

This section defines “approved by (or approval of) the outstanding shares” and explains what counts as approval.

If the commissioner finds an agency activity is unauthorized or unsafe, the commissioner may order the California state bank to end the agency arrangement.

A California state bank may act as an agent for an insured depository institution if it gets prior approval from the commissioner and follows any regulations the commissioner prescribes.

A California state bank seeking approval to act as agent for an insured depository institution must use the required form, provide the required information, and sign the application as required.

A California state bank applying for approval to act as an agent for an insured depository institution must include a $250 filing fee.

When deciding whether to approve or deny a California state bank’s application for agency activities, the commissioner must consider specified factors.

A California state bank may not act as an agent for an insured depository institution if the activity would be prohibited for it to do as a principal.

An office of a California state bank acting as agent for an insured depository institution is not treated as the insured depository institution’s office, and the institution is not treated as transacting business in California on that basis.

If the commissioner finds certain agency activities are unauthorized or unsafe, the commissioner may order a California state bank to end the agency arrangement.

For this code, “county” also includes a city and county.

A bank account in a minor’s name must be held for the minor’s exclusive benefit, and payments may be made to the minor or the minor’s order.

This division is named the “California Credit Union Law.”

The definitions in this division control how the division is interpreted, unless the context requires otherwise.

This division applies to any person, except a federal credit union engaged in the business of a credit union in this state.

If federal law preempts a provision of this division, that provision does not apply and cannot be enforced.

A credit union is defined as a cooperative that serves its members by promoting thrift and savings, providing credit, and operating for their mutual benefit.

Credit unions are generally subject to the laws that apply to nonprofit mutual benefit corporations, unless a credit-union-specific rule conflicts or subdivision (b) excludes a provision.

“Commissioner” means the Commissioner of Financial Protection and Innovation.

This section defines “impaired capital” for a credit union.

This section defines when a credit union is “insolvent” unless the division defines the term differently.

This section defines “credit manager” as a person approved by the board of directors and employed by a credit union to supervise its lending activities.

This section defines “obligation” for credit union purposes.

A bank account held by or in the name of a married person must be treated for that person’s exclusive benefit, kept free from other persons’ control or liens except a creditor’s, and paid to that person or their order.

A multiple-party bank account is governed by Part 2 of Division 5 of the Probate Code.

Banks must not pay interest on demand deposits, except in the limited cases stated in the section.

The section says broker-related benefits from certain noninterest-bearing accounts go to the broker unless the broker and lender or note owner agree otherwise in writing, and borrowers must receive at least 2% simple interest per year on covered impound account payments.

A real estate broker may receive the benefits from interest earned on funds held in an interest-bearing account for an institutional investor, but only if the broker and investor agree in writing for that loan.

Most people may not use a name or title containing “credit union,” unless they are authorized by this division. Certain qualifying nonprofit associations may use the phrase in their names.

A person must not knowingly make or spread false statements about a credit union’s financial condition; doing so is a misdemeanor.

Every credit union has the general powers given to corporations under the state’s Nonprofit Mutual Benefit Corporation Law, unless this division restricts those powers.

Credit unions must give members timely notices when certain fees are assessed, and starting January 1, 2026, they may not charge more than $14 or the CFPB amount, whichever is lower.

A bank must not pay or secure a creditor when the bank is insolvent or acting in contemplation of insolvency, if it is trying to prevent application of its assets or prefer one creditor over another.

A bank may not count an overdraft that has been standing for more than 90 days as an asset.

A bank may serve as a depositary, paying agent, trustee, or fiscal agent for public funds or securities, even if certain related officials or employees have an interest in the bank.

A bank account statement becomes finally settled after four years if the depositor has not objected; after that, the depositor cannot question it.

This section defines “approved by (or approval of) the shareholders.”

Banks may not charge for missed or late periodic installment deposits into certain savings accounts, and they must pay interest at no less than the lowest rate paid on other savings deposits.

Credit unions must be incorporated under the state Nonprofit Mutual Benefit Corporation Law, and the Secretary of State may not file their incorporation papers without the commissioner’s approval.

Every credit union’s articles of incorporation must include specified information, including its name, purpose, service agent, initial directors, and addresses.