SENATE DOCKET, NO. 1187 FILED ON: 1/16/2015
SENATE . . . . . . . . . . . . . . No. 543
The Commonwealth of Massachusetts
Anthony W. Petruccelli
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to the licensing and supervision of finance companies by the Division of Banks.
Anthony W. Petruccelli
First Suffolk and Middlesex
SENATE DOCKET, NO. 1187 FILED ON: 1/16/2015
SENATE . . . . . . . . . . . . . . No. 543
By Mr. Petruccelli, a petition (accompanied by bill, Senate, No. 543) of Anthony W. Petruccelli for legislation relative to the licensing and supervision of finance companies by the Division of Banks. Financial Services.
The Commonwealth of Massachusetts
In the One Hundred and Eighty-Ninth General Court
An Act relative to the licensing and supervision of finance companies by the Division of Banks.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Sections 96 through 114, inclusive, and section 114A, of Chapter 140, inclusive of the General Laws, as appearing in the 2012 Official Edition, are hereby repealed.
SECTION 2. Section 12G of chapter 255 of the General Laws, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:- In the event the charge or any portion thereof for life insurance under a policy issued pursuant to clause (c) of the first paragraph of section 133 of chapter 175 or for accident and health insurance under a policy issued pursuant to clause (j) of the first sentence of subdivision (A) of section 110 of chapter 175, or for involuntary unemployment insurance under a policy issued pursuant to clause (a) of section 117D of chapter 175 or any type of credit insurance under a policy as authorized in connection with a loan for personal, family or household purposes, is paid by the borrower or borrowers to the creditor, it shall not be deemed to constitute a charge in violation of sections 90A and 114B of chapter 140 or of sections 8 and 12 of chapter 255G.
SECTION 3. Section 13L of chapter 255 of the General Laws, as so appearing, is hereby amended by striking out the first sentence and inserting place thereof the following sentence:- Section 13L. Except as otherwise provided in section 8 of chapter 255G, and section 19 of chapter 255C, if a loan contract, for personal, family, or household purposes, is prepaid in full by cash, a new loan, refinancing or otherwise before the final installment date, the borrower shall receive a refund of the precomputed charges computed on a method which is at least as favorable to the borrower as the actuarial method, so-called.
SECTION 4. Chapter 255B of the General Laws, as so appearing, is hereby repealed.
SECTION 5. Chapter 255D of the General Laws, as so appearing, is hereby repealed.
SECTION 6. The General Laws are hereby amended by inserting after chapter 255F, as so appearing, the following chapter:
CHAPTER 255G. LICENSING OF CERTAIN FINANCE COMPANIES.
Section 1. Definitions
As used in this chapter the following words shall, unless the context otherwise requires, have the following meanings:--
“Commissioner”, the commissioner of banks.
“Consumer Loan”, means a loan of a principal amount of less than $50,000.00 consistent with Title X of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, the proceeds of which are intended by the borrower for use primarily for personal, family, or household purposes. The principal loan amount set forth in the preceding sentence shall automatically adjust to correspond with any inflation adjustment made to the exempt transaction amount referenced in the Federal Truth in Lending Act, Section 104, subsection (3) and any rules adopted pursuant to that Act. Consumer loans subject to this chapter shall include loans made to any person within this commonwealth, in person or by any other means, by an entity engaged in the business of making consumer loans outside this commonwealth.
“Control”, means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Controlling interest shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the voting securities or other interest of any other person.
“Control Person”, An individual (natural person) named that directly or indirectly exercises control over the applicant.
“Engaged in Making Consumer Loans” means, making consumer loans or engaging directly or indirectly, for a fee, commission, bonus or other consideration, in the business of brokering, negotiating, arranging, aiding or assisting the borrower or lender in procuring or making consumer loans.
“Finance charge”, the cost of credit determined in accordance with the provisions of section 4 of chapter 140D.
“Goods”, all things movable purchased primarily for personal, family or household purposes, other than motor vehicles as defined in this section, including goods which are or are to become fixtures or which are to become incorporated into a structure and gift certificates. Goods shall not include money or choses in action.
“Licensee”, means any person licensed under this chapter.
“Motor vehicle”, any self-propelled, motored device in, upon or by which any person is, or may be, transported or drawn upon a highway and which is used or bought for use primarily for personal, family or household purposes. The term does not include self-propelled tractors, trucks other than those purchased for personal or family non-business use, all commercial trailers and semitrailers, buses, earth-moving and construction machinery or equipment, power shovels, road building machinery or equipment, implements of husbandry and other agricultural machinery or equipment, or machinery or equipment not designed primarily for highway transportation but which may incidentally transport persons on a highway, or devices which move upon or are guided by a track, or travel through the air.
“Motor vehicle retail installment contract” or “contract”, an agreement, signed by the buyer in this commonwealth, pursuant to which the title to, the property in or a lien upon a motor vehicle, which is the subject matter of a retail installment sale, is retained or taken by a retail seller from a retail buyer as security, in whole or in part, for the buyer's obligation. The term includes a chattel mortgage, a conditional sales contract and a contract for the bailment or leasing of a motor vehicle by which the bailee or lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that the bailee or lessee is bound to become, or has the option of becoming, the owner of the motor vehicle upon full compliance with the terms of the contract.
“Motor vehicle sales finance company”, (1) any person engaged, in whole or in part, in purchasing motor vehicle retail installment contracts from one or more retail sellers and (2) a retail seller engaged, in whole or in part, in holding motor vehicle retail installment contracts acquired from retail buyers. The term "motor vehicle sales finance company" does not include the pledge of an aggregate number of such contracts to secure a bona fide loan thereon.
“Nationwide multi-state licensing system”, a system involving 1 or more states, the District of Columbia, or U.S. Territories for the sharing of regulatory information and the licensing and application processes, by electronic or other means, for financial services providers
“Retail buyer” or “buyer”, a person who buys or agrees to buy a motor vehicle or goods or services from a retail seller for use primarily for personal, family or household purposes and who executes a retail installment contract in connection therewith, or any legal successor in interest to such person, notwithstanding that he may have entered into one or more extension or refinancing agreements.
“Retail installment sale agreement”, an agreement, other than a revolving credit agreement or agreement reflecting a sale made pursuant thereto, signed by the buyer in this commonwealth, involving a finance charge and providing for the sale of goods or the rendering of services or both, or for the issuance of merchandise certificates, for a specified amount which the buyer undertakes to pay in more than one payment subsequent to the making of the agreement, or not involving a finance charge and providing for the sale of goods or the rendering of services or both, or for the issuance of merchandise certificates, for a specific amount which the buyer undertakes to pay in five or more installments subsequent to the making of the agreement. A retail installment sales agreement shall not include an agreement signed by a nonresident buyer in the commonwealth if such buyer has agreed that the law of his state shall apply. Retail installment sale agreement shall also include any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the value of goods involved and it is agreed that the bailee or lessee will become, or for no other or for a nominal consideration has the option to become the owner of the goods upon full compliance with his obligations under the contract. A retail installment sale agreement shall not include an agreement which provides (a) for the payment of the total sale price in no more than three monthly installments and (b) a finance charge not in excess of one dollar and (c) no collateral security for the seller.
“Retail installment sales finance company”, any person other than an installment seller engaged, in whole or in part, in purchasing retail installment sale agreements or revolving credit agreements of one or more retail sellers. The term “retail installment sales finance company” shall not include the pledgee of an aggregate number of such agreements to secure a bona fide loan thereon.
“Retail seller” or “seller”, a person who sells a motor vehicle or goods or services to a retail buyer under or subject to a retail installment contract.
“Revolving credit agreement”, an agreement, other than a retail installment sale agreement, signed by the buyer in this commonwealth pursuant to which the buyer may purchase at retail, goods or services or merchandise certificates on credit from time to time and under the terms of which a finance charge is to be computed in relation to the buyer’s balance from time to time. A revolving credit agreement shall not include an agreement signed by a nonresident buyer in the commonwealth if the buyer has agreed that the law of his state shall apply. A revolving credit agreement shall be deemed to be signed by the buyer if, after a request for an account, such agreement is in fact signed by the buyer, or if that account is used by the buyer, or if another is authorized by the buyer to use it, or if, after receiving notice of a change in the terms of an established account pursuant to which a credit card has previously been issued by the creditor, that account is thereafter used by the buyer, or another person is thereafter authorized by the buyer to use it.
“Security interest”, any property right or title in goods which are the subject of a retail installment sale agreement or revolving credit agreement taken or retained to secure performance of any obligation of the buyer under agreement, and any renewal or extension thereof, notwithstanding shipment or delivery to the buyer.
“Services”, any work, labor, or other services, purchased primarily for personal, family or household purposes, or furnished or agreed to be furnished in the delivery, installation, repair or improvement of goods, including but not limited to alterations, or improvements upon or in connection with real property, but excluding insurance of all types.
Section 2. Licenses Required
(a) No person shall without first obtaining a license under this chapter from the commissioner:
(1) engage in making consumer loans;
(2) act as a motor vehicle sales finance company; or
(3) act as a retail installment sales finance company.
(b) The following shall not be required to obtain a license pursuant to subsection (a):
(1) a bank as defined in section one of chapter 167, or any subsidiary thereof;
(2) a national banking association, federal savings bank, federal savings and loan association, federal credit union, or any subsidiary thereof;
(3) a bank, trust company, savings bank, savings and loan association or credit union organized under the laws of any other state of the United States, or any subsidiary thereof;
(4) a person conducting fewer than 5 transactions under subsection (a) within any period of 12 consecutive months.
(c) The provisions of this chapter shall not apply to:
(1)Loans to any student, or to any parent, legal guardian or sponsor of a student, made by any nonprofit, public or independent post-secondary educational institution within the commonwealth authorized by law to grant degrees, by the commonwealth or by any agency or instrumentality thereof; and provided, further, that such institutions may not take, receive, reserve, or charge interest, expenses and other consideration for making or securing a loan, except in the event of prepayment or refinancing, in whole or in part, of any existing loans by such institution to any such student, or to any such parent, legal guardian or sponsor of a student, which refinancing or prepayment occurs within eighteen months of the date such loan was made;
(2)Loans that are subject to section 90A of chapter 140 or section 28B of chapter 183;
(3)Transactions for which the commissioner, by regulation, determines that coverage under this chapter shall not be necessary to carry out the purposes of this chapter.
Section 3. License Application
(a)Any person seeking a license pursuant to this chapter shall file an application accompanied by an investigation fee, determined annually by the secretary of administration and finance under section 3B of chapter 7.
(b)The application for a license shall be in a form prescribed by the commissioner and shall contain:
(1) the name and address or addresses where the business of the applicant is located; and
(2) if the applicant is a partnership, association, corporation, or other form of business organization, the names and addresses of each member, director, principal officer thereof, and any individual acting as a manager of an office location.
(c)Such application shall also include a description of the activities of the applicant, in such detail and for such periods as the commissioner may require, as well as such further information as the commissioner may require. The commissioner may require an applicant or licensee to make, execute and deliver to the state treasurer a good and sufficient bond, as determined by regulation.
(d)The commissioner may participate in a Nationwide multi-state licensing system for the sharing of regulatory information and for the licensing and application, by electronic or other means, of entities engaged in any business under section 2(a) of this chapter. The commissioner may establish requirements for participation by an applicant in a Nationwide multi-state licensing system which may vary from the provisions of this section. The commissioner may require a background investigation of each applicant engaged in any business under section 2(a) of this chapter by means of fingerprint and state and national criminal history record checks by the department of criminal justice information services pursuant to section 172 of chapter 6 and the Federal Bureau of Investigation. If the applicant is a partnership, association, corporation or other form of business organization, the commissioner may require a background investigation for each member, director and principal officer of the applicant and any individual acting as a manager of an office location. The applicant shall pay directly to the Nationwide multi-state licensing system any additional fees relating to participation in the multi-state licensing system.
Section 4. Approval and Issuance of License
(a)Upon the filing of an application for a license, the commissioner shall issue the applicant a license to engage in a business licensed under this chapter, if the commissioner finds that:
(1)the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the partners or members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter;
(2)That the applicant, and each officer, director, and control person of the applicant, has never had a license under this chapter, or similar license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation;
(3)The applicant, and each officer, director, and control person of the applicant has not been convicted of a felony in a domestic, foreign, or military court:
(i)During the 7-year period preceding the date of the application for licensing and registration;
(ii)At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering;
(iii)Provided that any pardon or expungement of a conviction shall not be a conviction for purposes of this subsection.
Section 5. Procedure upon Denial of a License; Appeal to Superior Court; Review of Denial
If the commissioner fails to find that the applicant has satisfied the requirements of section 4 above, he shall notify the applicant of the denial, and within 20 days thereafter he shall enter upon his records a written decision and findings containing the reasons supporting the denial, and shall forthwith give written notice thereof by registered mail to the applicant. Within 30 days after the date of such notice the applicant may appeal from such denial to the superior court for the county of Suffolk, sitting in equity. The court shall hear all pertinent evidence and determine the facts, and upon the facts as so determined review said denial and, as justice and equity may require, affirm the same or order the commissioner to issue such license.
Section 6. Approval of Transfer, Sale of Controlling Interest and Relocation
(a)A license under this chapter shall not be transferable or assignable and shall expire on a date determined by the commissioner. Any sale or transfer of control in a licensed entity under this chapter shall be approved by the commissioner prior to the sale or transfer in accordance with regulations determined by the commissioner to carry out the purposes of the section.
(b)If a licensee intends to carry on such business at any place in addition to the address on the license, he shall so notify the commissioner, in writing, at least 30 days prior thereto, and he shall pay a fee for such additional location determined by the commissioner. Such notice shall contain the address of any such additional location and such other information as the commissioner may require.
(c)Any change of location or closing of a place of business of the licensee, either at the address stated on the license or at a place other than said address stated on the license, shall require prior written notice thereof to the commissioner. Such notice shall set forth the reason therefore and shall be filed with the commissioner at least 30 days prior to any such relocation or closing. If there shall be any change among the members, officers, partners or directors of any licensee, the licensee shall notify the commissioner in a timely manner of the name, address and occupation of each new member, officer, partner or director, and provide such other information as the commissioner may require.
Section 7. License Renewal
(a) A license issued under this chapter shall be valid for a period of not more than 1 year. The commissioner may renew a license under this chapter upon the submission of documents showing:
(1) the licensee remains in compliance with this chapter; and
(2) the licensee has paid all required fees for renewal of the license. The license of any licensee failing to satisfy the minimum standards for license renewal under this chapter shall expire.
Section 8. Board To Establish Maximum Rates of Charge; Notice; Hearing; Prohibitions
As used in this section the term "small loans" shall mean “consumer loans” as defined under section 1 of this chapter.
As used in this section the term “licensee” shall mean all persons licensed to make consumer loans under this chapter.
(a) The small loans regulatory board shall investigate from time to time the economic conditions and other factors relating to and affecting the business of making loans under this chapter, inclusive, and shall ascertain all pertinent facts necessary to determine what maximum rate of charge should be permitted. Upon the basis of such ascertained facts, the board shall determine and establish by regulation or order a maximum rate of charge in connection with such loans which will induce efficiently managed commercial capital to be invested in such business in sufficient amounts to make available adequate credit facilities to individuals seeking such loans at reasonable rates, and which will afford those engaged in such business a fair and reasonable return upon the assets. Such maximum rate of charge established by the board may be the aggregate of two or more different maximum rates applicable to different portions of the unpaid principal balance, so that as the size of the loan or the unpaid principal balance increases the aggregate rate decreases.
(b) The board may reestablish the maximum monthly rate of charge from time to time on the basis of changed conditions and facts. When the board establishes a maximum rate of charge it shall also by order permit licensees to precompute the monthly rate of charge contracted for on scheduled unpaid principal balances of loans contracted to be repaid in substantially equal and consecutive monthly installments of principal and charges combined with such installments applied to the unpaid balance of principal and the precomputed charge combined, subject to such provisions as the board shall by order prescribe for a refund or credit in the event of prepayment and for extension and default charges in the event of an extension or default. Such refund or credit shall be computed on a method which is at least as favorable to the borrower as the actuarial method, so-called. If the prepayment is made other than on an installment due date, it shall be deemed to have been made on the first installment due date if the payment is before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made. The details of application and the rules for a fraction of a month or partial prepayments shall be subject to the order of the board.
(c) Before establishing or reestablishing the maximum rate of charge, the board shall give reasonable notice by mail of its intention to all licensees and shall give such licensees an opportunity to be heard thereon and to introduce evidence with respect thereto. Any order which the board may make establishing or reestablishing the maximum rate of charge after such hearing shall contain the effective date thereof, which shall be not less than 60 days after notice of the establishing of such new rates as given by mail to each licensee. An order of the board establishing or reestablishing the maximum rate of charge shall not apply to loans made prior to its effective date. Within the authority conferred by this section, the board shall be subject to all pertinent provisions of chapter 30A.
(d)The total amount to be collected on any loan by a licensee for interest, expenses and other considerations shall not, in the aggregate, exceed an amount equivalent to the maximum monthly rate computed on unpaid principal balances of the amount actually received by the borrower except that the lawful fees actually paid out by the lender to a public officer for filing, recording, releasing or discharging any instrument securing the loan may be charged to and collected from the borrower when the loan is made or at any time thereafter and may be collected in such manner as is authorized by the board in connection with loans on which charges are precomputed as heretofore provided, but such interest shall not exceed 12 percent per annum or the original rate of interest on the note evidencing the loan, whichever is less, after the termination of 1 year after maturity of the loan.
(e)No licensee shall willfully permit any person, or any husband and wife jointly or severally, to be obligated, either directly or contingently to such licensee, under more than one contract of loan at the same time for the purpose of obtaining a higher rate of charge than would otherwise be permitted by this section on a single loan contract. No licensee or company or association to which this chapter applies, inclusive, apply shall charge or receive upon any loans more than the maximum rate of charge permitted by this section. No charge, bonus, fee, expense or demand of any nature whatsoever, except as herein provided, shall be made upon loans to which said sections relate; provided, however, that a licensee may, if the loan agreement so provides, assess and collect a charge, not to exceed 10 dollars, for any check, draft or order for the payment of money submitted in accordance with said agreement which is returned unpaid or not honored by a bank or other depository.
Section 9. Finance Charges; Rates; Computation; No Other Charge To Be Taken
(a)A motor vehicle sales finance company or retail installment sales finance company may charge, receive and collect, a finance charge not in excess of an annual percentage rate of 21 percent. Such finance charge shall be computed on the amount financed as determined under chapter 140D on contracts payable in successive monthly installments substantially equal in amount.
(b)On contracts providing for installments extending for a period less than or greater than 1 year, the finance charge shall be computed proportionately. The finance charge may be computed on the basis of a full month for any fractional month period in excess of 15 days. When a motor vehicle retail installment contract or retail installment sales agreement provides for unequal or irregular installments, the finance charge shall be no more than the effective rate provided in this section, having due regard for the schedule of installments.
(c)The finance charge shall be inclusive of all charges incident to investigating and making the contract, and for the extension of the credit provided for in the contract and no fee, expense or other charge whatsoever shall be taken, received, reserved or contracted for except as provided in this section and for those items expressly provided for in the motor vehicle retail installment contract or retail installment sales agreement as set forth in chapter 140D.
Section 10. Law as to Rate of Interest in Absence of Agreement Not Affected
Section 8 of this chapter shall not affect so much of section 3 of chapter 107 as provides that, if there is no agreement for a different rate, the interest on money shall be at the rate of 6 dollars upon each 100 dollars for a year.
Section 11. Enforcement Duties of Police
The state police and the police of the cities or towns shall carry out the directions of the commissioner in enforcing the provisions of this chapter, and any regulations made by him.
Section 12. Loans with Charges Exceeding Section 8 Limits Voidable; Composite Rate; Extension, Default or Deferment Charges Not Used To Determine Maximum Rate of Charge
(a) An exempt entity under section 2(b)(1), (2), or (3) of this chapter, may not take, receive, reserve or charge interest, expenses and other considerations for making or securing a consumer loan in excess of those permitted by section 8 of this chapter.
(b) Any consumer loan made by any exempt entity on which charges for interest, expenses and other considerations exceed those permitted by section 8 may be declared void by the supreme judicial or superior court in equity upon petition by the person to whom the loan was made, and any such exempt entity making such loan shall be subject to a fine of not more than 500 dollars. This section shall not be construed as preventing a rate of charge for interest, expenses and other consideration on one or more portions of a loan in excess of the permitted maximum rate of charge applicable to said portion or portions, provided, that the composite rate of charge on the whole loan produces an amount equal to or less than that which would be produced were said maximum rate of charge applied to said loan. Extension, default or deferment charges shall not be deemed to be interest, expenses and other considerations in determining the maximum rate of charge that may be taken, received, reserved or charged for said loan.
Section 13. Business without License; Void Loans
Any consumer loan made by an unlicensed person in violation of section 8 of this chapter shall be void.
Section 14. Regulations; Investigations and Examinations
(a)The commissioner shall have the powers to prescribe rules and regulations necessary and proper for carrying out the administration and enforcement of this chapter including, but not limited to, the granting of licenses and the renewal thereof, the conduct of examinations and investigations, terms of agreements, late charges, fees, and the keeping of records by a licensee.
(b) The commissioner shall have the authority to conduct investigations and examinations for:
(1) purposes of initial licensing, license renewal, license suspension, license conditioning, license
revocation or termination, or general or specific inquiry or investigation to determine compliance with
(2) purposes of making determinations of a licensee’s compliance with the provisions of this chapter or any rule or regulation issued hereunder and with any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter. The commissioner or a representative of the commissioner shall have the authority to access, receive and use any books, accounts, records, files, documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence; and
(3) for the purposes of investigating violations or complaints arising under this chapter, or for the purposes of examination, the commissioner may review, investigate, or examine any licensee, individual or person subject to this chapter, in order to carry out the purposes of this chapter.
(c)Each licensee or person subject to this chapter shall make available to the commissioner upon request the books and records relating to the operations of such licensee, individual or person. The commissioner shall have access to such books and records and interview the officers, principals, employees, independent contractors, agents, and customers of the licensee, individual or person subject to this chapter concerning their business.
(d)Each licensee or person subject to this chapter shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including, but not limited to: (i) accounting compilations; (ii) information lists and data concerning transactions under this chapter in a format prescribed by the commissioner; or (iii) such other information deemed necessary to carry out the purposes of this section. A licensee neglecting to file such report or failing to amend the same within 15 days of notice from said commissioner directing the same shall, unless such neglect or failure is due to justifiable cause and not due to willful neglect, pay to the commonwealth 50 dollars for each day during which such neglect or failure continues.
(e)In making any examination or investigation authorized by this chapter, the commissioner may control access to any documents and records of the licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no individual or person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the licensee have been, or are at risk of being altered or destroyed for purposes of concealing a violation of this chapter, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(f) The commissioner shall preserve a full record of each such examination of a licensee. All records of investigation and reports of examination by the commissioner including, but not limited to, work papers, information derived from such reports or in response to such reports, and any copies thereof in the possession of any licensee under the supervision of the commissioner, shall be confidential and privileged communications, shall not be subject to subpoena and shall not be a public record under clause 26 of section 7 of chapter 4. For the purpose of this paragraph, records of investigation and reports of examinations shall include records of investigation and reports of examinations conducted by any bank regulatory agency of the federal government and any other state, and of any foreign government which are considered confidential by such agency or foreign government and which are in possession of the commissioner. In any proceeding before a court, the court may issue a protective order to seal the record protecting the confidentiality of any such record, other than any such record on file with the court or filed in connection with the court proceeding, and the court may exclude the public from any portion of a proceeding at which any such record may be disclosed. Copies of such reports of examination shall be furnished to a licensee for its use only and shall not be exhibited to any other person, organization or agency without prior written approval by the commissioner. The commissioner may furnish to regulatory agencies of the federal government, of other states, or of foreign countries and any law enforcement agency, such information, reports, inspections and statements relating to the licensees under his supervision.
(g) In order to carry out the purposes of this section, the commissioner may: (i) retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations; (ii) enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section; (iii) use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the licensee, individual or person subject to this chapter; (iv) accept and rely on examination or investigation reports made by other government officials, within or without the commonwealth; or (v) accept audit reports made by an independent certified public accountant for the licensee, individual or person subject to this chapter in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation or other writing of the commissioner.
(h) No person subject to this chapter shall knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information unless otherwise authorized by law or regulation.
(i) The commissioner, and any person designated by him, may require the attendance and testimony of any person whom the commissioner deems necessary relative to the conduct and operation of such business. The total cost for any such inspection, which shall be paid by the licensee within 30 days after the receipt of an invoice therefore, shall be in accordance with fees determined annually by the secretary of administration and finance pursuant to section 3B of chapter 7, including expenses for necessary travel outside the commonwealth for the purposes of conducting such inspections.
(j) Persons licensed under this chapter are under a continuing obligation to update information on file with the commissioner. If any information filed with the commissioner becomes materially inaccurate, the licensee shall promptly submit an amendment to its application records that will correct the information on file with the commissioner filed through the Nationwide multi-state licensing system, where required.
Section 15. Suspension, Revocation, or Surrender of License; Grounds; Notice and Hearing
(a) The commissioner may suspend or revoke any license issued pursuant to this chapter if said commissioner finds that:
(1) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; or
(2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license.
(b)Except as provided in section 16, no license shall be revoked or suspended except after notice and a hearing thereon pursuant to chapter 30A.
(c)A licensee may surrender a license by delivering to the commissioner written notice that it thereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.
(d)No revocation, suspension or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any person.
Section 16. Issuance of Cease and Desist Order; Notice and Hearing; Vacation or Modification of Order; Review Summary Suspension
(a) If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in or is about to engage in an act or practice constituting a violation of a provision of this chapter or a rule, regulation or order hereunder, he may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in his judgment will effect the purposes of this chapter.
(b) If the commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a) he may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee affected thereby that such order has been so entered, the reasons therefore, and that within 20 days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether or not such temporary order shall become permanent and final. If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee subject to said order, shall, by written finding of facts and conclusions of law, vacate, modify or make permanent the order.
(c) No order under this section, except an order issued pursuant to subsection (b) and (d), may be entered without prior notice of and opportunity for a hearing. The commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.
(d) The commissioner may issue an order summarily suspending a license under this chapter:
(1) when an imminent threat of financial loss or imminent threat to the public welfare exists. The order to summarily suspend a license shall be served upon the licensee.
(2) A licensee upon which an order to summarily suspend its license has been served shall have 20 days after the date of service of the order within which to file with the commissioner a request for a hearing.
(3) A hearing shall be promptly held upon receipt of a request for a hearing filed by a licensee.
(4) A summary suspension of a license shall continue until the commissioner finds that the imminent threat of financial loss or imminent threat to the public welfare no longer exist.
(e) Any order issued pursuant to this section shall be subject to review as provided in chapter 30A.
Section 17. Penalties
(a) Whoever violates section 2 or any rule or regulation promulgated thereunder shall be punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not more than 2 1/2 years or by imprisonment in state prison for not more than 5 years, or both such fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate offense. The penalty provision of this section shall be in addition to, and not in lieu of, any other law applicable to a licensee or other person for violating section 2 or any rule or regulation made thereunder.
(b) Whenever the commissioner finds that any licensee or exempt person under section 2 has violated this chapter or any rule or regulation adopted thereunder, or any other law of the commonwealth or federal laws applicable to the conduct of the business subject to this chapter, the commissioner may, by order, in addition to any other action authorized under this chapter or any rule or regulation made thereunder, impose a penalty upon the person which shall not exceed $5,000 for each violation, up to a maximum of $100,000 for such violation plus the costs of investigation. The commissioner may impose a penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation adopted thereunder, by a person other than a licensee or exempt person under section 2, plus the costs of investigation.
(c) Nothing in this section shall limit the right of any individual or entity who has been injured as a result of any violation of this chapter by a licensee, or any person other than a licensee or exempt person under section 2, to bring an action to recover damages or restitution in a court of competent jurisdiction.
(d) Any findings or order issued by the commissioner pursuant to this section shall be subject to review as provided in chapter 30A.
Section 18. Violation – Written Notice
(a) Whenever the commissioner determines that any person has, directly or indirectly, violated any section of this chapter or any rule or regulation adopted thereunder, applicable to the conduct of the licensed business within the commonwealth, or any order issued by the commissioner under this chapter or any written agreement entered between the licensee and the commissioner, the commissioner may serve upon that person a written notice of intention:
(1) to prohibit the person from performing in the capacity of a principal employee on behalf of any licensee for a period of time that the commissioner considers necessary;
(2) to prohibit the person from applying for or obtaining a license from the commissioner for a period up to 36 months following the effective date of an order issued under subsection (b) or (c); or
(3) to prohibit the person from any further participation, in any manner, in the conduct of any business licensed under this chapter in Massachusetts or to prohibit the person from being employed by, an agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the commissioner.
(b) A written notice issued under subsection (a) shall contain a written statement of the facts that support the prohibition and shall give notice of an opportunity for a hearing to be held thereon. The hearing shall be fixed for a date not more than 30 days after the date of service upon the commissioner of the request for a hearing. If the person fails to submit a request for a hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in person or by a duly authorized representative, the party shall be considered to have consented to the issuance of an order of prohibition in accordance with the notice.
(c) In the event of the consent under subsection (b), or if after a hearing the commissioner finds that any of the grounds specified in the notice have been established, the commissioner may issue an order of prohibition in accordance with subsection (a) as the commissioner finds appropriate.
(d) An order issued under subsection (b) or (c) shall be effective upon service upon the person. The commissioner shall also serve a copy of the order upon the licensee of which the person is an employee or on whose behalf the person is performing. The order shall remain in effect and enforceable until it is modified, terminated, suspended, or set aside by the commissioner or a court of competent jurisdiction.
(e) Except as consented to in writing by the commissioner, any person who, pursuant to an order issued under subsection (b) or (c), has been prohibited from participating in whole or in part in the conduct of any business licensed under this chapter in Massachusetts may not, while the order is in effect, continue or commence to perform in the capacity of a principal employee, or otherwise participate in any manner, if so prohibited by order of the commissioner, in the conduct of the affairs of:
(1) any licensee under this chapter;
(2) any other business which requires a license from the commissioner; or
(3) any bank, as defined under section 1 of chapter 167 or any subsidiary thereof.
SECTION 7. Section 14(a) of chapter 255G of the General Laws, as inserted by SECTION 6, shall take effect upon passage. The remainder of SECTION 6 shall take effect 9 months after date of its passage.
SECTION 8. (a) A license issued pursuant to chapter 140, 255B or 255D of the General Laws, including all authorized locations, that is in effect immediately before the effective date of this act shall remain in force as a license under said chapter 255G. Such licensees shall file a renewal application in accordance with section 7 of chapter 255G of the General Laws.
(b) Any person that was not required to obtain a license pursuant to chapter 140, chapter 255B or chapter 255D, of the General Laws, but that is now required to obtain a license under chapter 255G shall file an application for a license within 6 months of the effective date of this act in order to continue to act as a consumer lender in the commonwealth. If such application is timely filed and pending with the commissioner, that person may continue to make consumer loans in this commonwealth, until such time as the application has been approved, withdrawn or denied.