The California Department of Financial Protection and Innovation (DFPI) continues to tweak its proposed complaints and inquiries regulation. The newest iteration includes an update requiring those covered under the act (which includes debt collectors) to designate an officer to be ultimately accountable for the effective operation and governance of the complaint process, but does not specify what "ultimately accountable" means. Comments must be submitted to the DFPI by April 7, 2023.


In 2022, the California Department of Financial Protection and Innovation (DFPI) proposed regulations establishing consumer complaint-filing processes and procedures for complaint investigation, response, reporting, and tracking. Many industry groups and other stakeholders, including the CRC, commented on the proposal.

The California DFPI updated the proposal in December 2022 and clarified several key points. California listened to industry feedback and the update even appeared to adopt all of the CRC's comments (authored by  Legal Advisory BoardJoann Needleman of Clark HillBrit Suttel of Barron and Newburger, and Leslie Bender of Eversheds Sutherland)

The Newest Modification

On March 23, 2023, the California DFPI announced its second modification to its proposal. Many of the updates were minor formatting updates and innocuous clarifications, but there were a few substantive changes, including: 


  • a matter at issue in litigation is only exempted from being considered a "complaint" under the proposal if the person lodging the complaint filed the lawsuit. (see Section 1071(1)(H); page 2)

  • Disclosures regarding the Complaint process and procedure need only be submitted to consumers who reside in California (see Section 1072(b)(1); page 4)

  • Website disclosures must be provided in a font at least as large as the largest text on the page. (see Section 1072(b)(2); page 5)

  • That covered entities shall have a live representative available to accept oral complaints at least twenty (20) hours a week, between 8 a.m. to 8 p.m. Pacific time (See Section 1072(c)(3); Page 6)

The most significant substantive change may create personal liability for certain officers of the covered entity, including debt collectors. See Section 1072(f); page 7 which now states:

"The covered person shall designate an officer to monitor the complaint process who shall be ultimately accountable for the effective operation and governance of the complaint process. The officer and any of the officer’s designees shall have the authority to change, amend, or rescind the acts, omissions, decisions, conditions, or policies of the covered person or service provider related to the financial product or service that is the subject of a complaint and to forgive or extinguish any debt, charge, or obligation of a consumer." (emphasis added)

The proposal does not define "ultimately accountable" or provide any other insight into what that phrase might mean.

Comment Process

Interested stakeholders must submit comments addressing proposed updates by April 7, 2023. Comments may be sent by either of the following methods:

  • Via e-mail to: with a copy to the comments as "PRO 03-21" in the subject line.

  • Via postal mail addressed to: Department of Financial Protection and Innovation, Attn: Araceli Dyson, 2101 Arena Blvd., Sacramento, CA 95834.

insideARM Perspective

Though most of the updated proposal adds language to clarify points already included in the proposal, including a phrase that may create personal liability is troublesome. The DFPI already has the ability to enforce the rules without creating personal liability. The proposal does not specify why personal accountability is necessary to effectuate the purpose of the rule. 

The proposal says an officer must be ultimately accountable for the "effective operation and governance of the complaint process" but fails to establish any threshold or definition of what will be and will not be effective. Hopefully, including this language is merely a poor choice of words by the DFPI, and they will clarify it. If not, if the DFPI does indeed intend to create personal liability for officers of covered entities, they need to establish clear standards.

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