On June 29, Connecticut Governor Ned Lamont signed SB 1033, An Act Concerning Various Revisions to the Banking Statutes, into law. As discussed here, with this bill, Connecticut joins several other states that have set strict rate caps on consumer loans, including Illinois, New Mexico, Colorado, and California, and those that expressly provide for a predominant economic interest test for true lender purposes. The law will take effect on October 1, 2023.

Among other things, the bill: 1) raises the small loan limit from $15,000 to $50,000; 2) expands the Small Loan Act (SLA) licensure requirement to cover certain brokering and facilitating activities; 3) codifies a predominant economic interest test in the SLA; 4) broadens the definition of small loan to include income sharing agreements (ISAs), refund anticipation loans, and pension advances; 5) limits the Annual Percentage Rate (APR) on loans of $5,000 to $50,000 to 25%; 6) redefines APR as an all-in APR calculated pursuant to the federal Military Lending Act (MLA); and 7) defines finance charge more broadly.

Notable changes from the legislation introduced in February include:

  • GAP Waivers. The final law no longer allows consumers to cancel these agreements for full refunds or credits to balances owed upon cancellation.
  • Capital and Surplus Requirements. The final law applies a “capital and surplus” calculation to certain investment decision making of Connecticut banks (i.e., liabilities of borrowers, debt and equity securities, debt and equity mutual funds, social purpose investments, savings banks life insurance, mortgage lending, and real estate for the banks’ business).
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Photo of Jason Cover Jason Cover

Jason’s in-depth experience advising on consumer lending matters both as in-house counsel and outside advisor provides extensive industry knowledge for his financial services clients.

Photo of Mark Furletti Mark Furletti

Mark helps clients navigate regulatory risks posed by state and federal laws aimed at protecting consumers and small business, particularly in connection with credit, deposit, and payments products. He is a trusted advisor, providing practical legal counsel and advice to providers of financial

Mark helps clients navigate regulatory risks posed by state and federal laws aimed at protecting consumers and small business, particularly in connection with credit, deposit, and payments products. He is a trusted advisor, providing practical legal counsel and advice to providers of financial services across numerous industries.

Photo of Taylor Gess Taylor Gess

Taylor focuses her practice on providing regulatory advice on matters related to federal and state consumer protection, consumer finance, and payments laws, including those that apply to payment cards, lines of credit, installment loans, electronic payments, online banking, buy-now-pay-later transactions, retail installment contracts…

Taylor focuses her practice on providing regulatory advice on matters related to federal and state consumer protection, consumer finance, and payments laws, including those that apply to payment cards, lines of credit, installment loans, electronic payments, online banking, buy-now-pay-later transactions, retail installment contracts, rental-purchase transactions, and small business loans.

Photo of Anthony Kaye Anthony Kaye

Tony counsels financial services providers on compliance issues, including military lending laws, defends clients facing government investigations, examinations and enforcement actions, and defends individual and class action lawsuits brought by consumers. Clients appreciate Tony’s collaborative, common-sense and cost-effective approach to evaluating and solving

Tony counsels financial services providers on compliance issues, including military lending laws, defends clients facing government investigations, examinations and enforcement actions, and defends individual and class action lawsuits brought by consumers. Clients appreciate Tony’s collaborative, common-sense and cost-effective approach to evaluating and solving problems.

Photo of Caleb Rosenberg Caleb Rosenberg

Caleb is counsel in the firm’s Consumer Financial Services Practice Group. He focuses his practice on helping federal and state-chartered banks, fintech companies, finance companies, and licensed lenders navigate regulatory risks posed by state and federal laws aimed at protecting consumers and small…

Caleb is counsel in the firm’s Consumer Financial Services Practice Group. He focuses his practice on helping federal and state-chartered banks, fintech companies, finance companies, and licensed lenders navigate regulatory risks posed by state and federal laws aimed at protecting consumers and small businesses in the credit and alternative finance products industry.