California Enacts SB 825 to Strengthen Consumer Financial Protections

California, October 21, 2025

News Summary

On October 6, California Governor Gavin Newsom signed SB 825, amending the California Consumer Financial Protection Law to enhance enforcement against financial service providers. The law clarifies exemptions for licensed entities while empowering the California Department of Financial Protection and Innovation to address deceptive practices. Set to take effect in January 2026, SB 825 aims to protect consumers amidst reduced federal oversight.

California has enacted significant legislative changes with the signing of SB 825 by Governor Gavin Newsom on October 6. This new law modifies the California Consumer Financial Protection Law (CCFPL), enhancing the state’s capacity to enforce consumer financial protection rules against financial service providers.

SB 825 specifically clarifies that licensed financial service providers, such as escrow agents, finance lenders, and broker-dealers, are exempt from the CCFPL under certain licenses. Despite these exemptions, the California Department of Financial Protection and Innovation (DFPI) will maintain the authority to address any “deceptive or abusive acts or practices” committed by these licensed entities. This aims to preserve consumer protection oversight in California, ensuring that these entities cannot exploit their licensing status to bypass accountability.

The DFPI will now be empowered to pursue enforcement actions against unfair, deceptive, or abusive practices that fall outside the parameters of existing licensing. This change responds to a perceived decline in federal oversight provided by the Consumer Financial Protection Bureau (CFPB) during the Trump administration, aiming to fill gaps in regulatory frameworks and bolster consumer protections within the state.

SB 825 garnered broad legislative support, passing the Assembly with a vote of 59-19 and receiving Senate approval earlier in June 2025. The law is scheduled to take effect in January 2026.

The CCFPL prohibits “covered persons” or “service providers” from engaging in unfair, deceptive, or abusive acts when offering consumer financial products or services. Prior to the amendment, certain exemptions shielded state-chartered banks, credit unions, nonbank lenders, and payment service providers from DFPI enforcement actions. However, SB 825 narrows these exemptions, thus expanding the DFPI’s reach. The law provides the DFPI with extensive investigative powers, including the ability to issue subpoenas, initiate administrative proceedings, and seek various forms of relief against entities suspected of CCFPL violations.

It is important to note that SB 825 does not extend the DFPI’s jurisdiction over national banks or other federally chartered institutions. However, financial institutions should prepare for heightened compliance risks due to the overlapping regulatory oversight introduced by this legislation. The standards for defining “unfair” and “deceptive” acts remain uncertain, which could lead to increased litigation and compliance challenges for financial institutions involved in consumer finance.

As financial service providers adapt to these changes, they should anticipate rising compliance costs associated with the complexities stemming from SB 825’s enforcement powers. Proponents of the bill assert that such measures are crucial to safeguarding consumers against reduced federal oversight. Conversely, critics of SB 825 raise alarms about the potential for regulatory overreach, which could impose burdens on the financial services sector.

Key Features of California’s SB 825

• Signed into law by Governor Gavin Newsom on October 6.
• Amends the California Consumer Financial Protection Law (CCFPL).
• Clarifies exemptions for licensed financial service providers.
• DFPI retains enforcement authority against deceptive acts.
• Aims to close regulatory gaps from reduced federal oversight.
• Passed Assembly with a 59-19 vote; set to take effect January 2026.
• Expanded investigative and enforcement powers for DFPI.
• Does not extend jurisdiction over federally chartered institutions.
• Potential increased compliance costs and litigation risks.

FAQ

Deeper Dive: News & Info About This Topic

• Daily Journal: SB 825 Expanding State Consumer Financial Protection
• JD Supra: California Amends Its Financial Regulations
• Manatt: California Responds to Federal Deregulation
• Consumer Financial Services Law Monitor: California Introduces Consumer Protection Legislation
• Wikipedia: California Consumer Financial Protection Law

Author: Anaheim Staff Writer

The Anaheim Staff Writer represents the experienced team at HEREAnaheim.com, your go-to source for actionable local news and information in Anaheim, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as major conventions at the Anaheim Convention Center, including NAMM and VidCon, exciting games at Angel Stadium and Honda Center, and developments at Disneyland Resort Our coverage extends to key organizations like the Anaheim Chamber of Commerce and Visit Anaheim, plus leading businesses in hospitality, entertainment, and innovation that power the local economy As part of the broader HERE network, including HERECostaMesa.com, HEREHuntingtonBeach.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.