On July 1, 2026, California’s newly created Business and Consumer Services Agency (BCSA) began operations under the leadership of former Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, whom Governor Gavin Newsom appointed as the agency’s inaugural Secretary on May 12, 2026.
Governor Newsom’s announcement emphasized priorities including combating junk fees and hidden charges, strengthening online privacy and consumer data protections, increasing corporate accountability, and protecting consumers and small businesses. These priorities closely track many of the themes that defined Chopra’s tenure at the CFPB, including consumer data rights, algorithmic decision-making, nonbank supervision, and scrutiny of emerging fintech business models.
Shortly before leaving the CFPB, Chopra oversaw publication of the CFPB’s January 2025 report, Strengthening State-Level Consumer Protections, which encouraged states to expand their consumer protection frameworks and play a larger role in consumer financial regulation. The report advocated greater use of state unfair, deceptive, and abusive acts or practices authorities, increased attention to consumer data rights, and stronger oversight of emerging financial products and technologies.
Against that backdrop, we view Chopra’s appointment as further evidence that California intends to play an increasingly prominent role in consumer financial regulation and enforcement.
The BCSA was created through the governor’s Reorganization Plan No. 1 of 2025, which reorganized the former Business, Consumer Services, and Housing Agency into two separate cabinet agencies: the Business and Consumer Services Agency and the California Housing and Homelessness Agency.
The BCSA will oversee a broad range of consumer-facing departments, including the DFPI, Department of Real Estate, Department of Consumer Affairs, and several other licensing and enforcement agencies.
Importantly, the creation of the BCSA does not alter the DFPI’s underlying statutory authority. The DFPI retains its existing authority to supervise, investigate, license, regulate, and bring enforcement actions under the California Consumer Financial Protection Law (CCFPL), California Financing Law (CFL), Digital Financial Assets Law (DFAL), and other California statutes.
As Secretary, Chopra’s position is designed to provide strategic oversight, policy coordination, and executive branch leadership across the departments housed within the BCSA. In practice, Chopra will be positioned to help coordinate policy, align priorities across departments, advise the governor, and influence California’s broader consumer protection agenda.
California has therefore created a new structure for coordinating and directing the authority that its state agencies already possess. It has not created a new regulatory authority.
California already has one of the most expansive consumer financial regulatory frameworks in the country. Through the CCFPL, CFL, DFAL, and other statutes, the DFPI possesses broad supervisory, licensing, investigative, and enforcement powers over a wide range of financial products and services.
As a result, the key question for industry participants is how aggressively and strategically California’s policy objectives will be implemented. Several areas appear likely to receive attention under the new structure:
Fast-Growing Consumer Financial Products (EWA, BNPL, and HEI)
California has consistently been among the most active states in regulating emerging consumer financial products, and that trend is likely to continue under the BCSA structure. Earned wage access (EWA) remains an area of significant regulatory interest, with continued focus expected on the future of California’s current framework, potential legislative activity, and the use of the CCFPL to supervise providers.
Buy now, pay later (BNPL) products are also likely to remain under close scrutiny. The DFPI currently treats many BNPL providers as subject to licensure and supervision under the CFL, and continued attention to disclosures, fees, underwriting practices, and consumer protection issues is likely.
California regulators have also shown increasing interest in home equity investment (HEI) products. Earlier this year, the DFPI issued a public consumer alert on HEI warning homeowners about potential risks associated with HEIs, including the complexity of the products, valuation issues, and the long-term financial implications for consumers. While the alert did not announce any new regulatory requirements, it reflects growing regulatory attention to innovative consumer finance products that fall outside traditional lending models.
Taken together, EWA, BNPL, and HEI products illustrate California’s continued focus on rapidly evolving financial products where regulators may seek to balance innovation with consumer protection through supervision, enforcement, guidance, and, where appropriate, future rulemaking or legislation.
Digital Assets
DFAL is one of the most significant state regulatory frameworks governing digital assets enacted to date and is now entering its implementation phase. As of July 1, 2026, subject to DFPI’s implementation and transition provisions, many businesses engaging in digital financial asset business activity with California residents will be required to obtain a DFPI license and comply with ongoing supervisory, examination, consumer protection, disclosure, capital, recordkeeping, and cybersecurity requirements.
Unlike traditional state money transmission laws, DFAL establishes a licensing and supervisory framework specifically tailored to digital financial asset business activity and gives the DFPI broad authority to supervise licensees and adopt implementing regulations. In the absence of comprehensive federal crypto legislation, DFAL is likely to become one of the country’s most influential regulatory frameworks for digital assets.
Chopra’s appointment raises important questions regarding the pace and scope of DFAL implementation, the Department’s supervisory and enforcement priorities, and whether California seeks to establish itself as the national leader in crypto consumer protection and regulatory oversight.
Consumer Fees and Data, Open Banking, and AI
The governor’s announcement repeatedly referenced junk fees and hidden charges. Companies should expect continued scrutiny of disclosures, pricing practices, recurring fees, and other customer-facing practices. Chopra has also long emphasized consumer control over financial data and supported open banking initiatives. California’s existing privacy framework, combined with growing regulatory interest in artificial intelligence and algorithmic decision-making, could make these areas an important focus going forward.
Bank Assessments and Charters
Chopra and the BCSA will also need to navigate California’s relationship with federal bank regulators. Some California-chartered banks have expressed concerns about increasing DFPI assessment fees and regulatory requirements, and are considering alternatives, including federal charters, for what may be viewed as a simpler regulatory framework. Following increases in DFPI assessment fees after the 2023 banking turbulence, several California-chartered banks have converted to federal charters, and a more aggressive California regulatory posture could further influence chartering decisions.
Although California possesses significant regulatory authority, agencies remain subject to important procedural constraints. Under the California Administrative Procedure Act
(CA APA), agencies must generally undertake formal rulemaking when adopting a rule, standard, or policy of general application that implements, interprets, or makes specific the law they administer. As a result, agencies cannot create binding industry-wide requirements through informal documents when formal rulemaking is required.
The DFPI can continue to issue interpretive opinions, guidance documents, commissioner releases, bulletins, reports, press releases, and enforcement actions; these tools can provide valuable insights into regulatory priorities and statutory interpretation. However, they generally do not carry the same legal force as regulations adopted through the CA APA process.
This distinction is important because California law recognizes the concept of “underground regulations,” which are agency actions that effectively operate as regulations without having been adopted through required CA APA procedures.
As agencies become more active in emerging areas such as fintech, digital assets, data rights, and artificial intelligence, questions regarding the line between permissible guidance and impermissible underground regulation will become increasingly important.
The creation of the BCSA and Chopra’s appointment do not fundamentally alter the DFPI’s statutory authority. However, they may significantly influence how California prioritizes and coordinates consumer financial regulation across agencies. We expect the BCSA to play a more prominent role in shaping consumer-facing DFPI activities, including the use of supervisory guidance, interpretive opinions, bulletins, and examinations.
Underground regulations may be challenged either administratively with California’s Office of Administrative Law, or in court. Interested parties can also consider informal meetings, comment letters, or correspondence with the agency at issue as initial steps in raising concerns that an agency action constitutes an underground regulation.
Companies should expect continued coordination between the BCSA and DFPI with the California Department of Justice on consumer protection matters. With the BCSA set to begin operations on July 1, 2026, companies should assess their readiness and closely monitor signals coming from both the DFPI and BCSA regarding consumer protection priorities, supervisory expectations, and enforcement initiatives.