South Carolina Code of Regulations Chapter 15 - STATE BOARD OF FINANCIAL INSTITUTIONS CONSUMER FINANCE DIVISION
1. What is the State Board of Financial Institutions?
The State Board of Financial Institutions is a government body in South Carolina that regulates financial companies operating in the state. This includes banks, credit unions, mortgage companies, and consumer finance companies. Its goal is to protect consumers and ensure financial institutions operate safely and legally.
Within the Board, there’s a Consumer Finance Division. This division specifically oversees businesses that offer loans and credit to consumers, like personal loans, installment loans, payday loans, and other types of small-dollar lending.
2. Purpose of Chapter 15
Chapter 15 of the South Carolina Code of Regulations lays out the rules for the Consumer Finance Division. Its main purposes are:
Licensing – It explains how a business must apply for and maintain a license to operate as a consumer finance company.
Operations – It sets rules on how these businesses can operate, including the types of loans they can offer and how interest is calculated.
Consumer Protections – It ensures borrowers are treated fairly, that loan terms are transparent, and that businesses cannot engage in abusive practices.
Compliance and Enforcement – It describes how the state enforces the rules and the penalties for breaking them.
3. Key Sections of Chapter 15
While the full chapter is detailed, the major sections include:
A. Licensing Requirements
Who needs a license: Any person or company that makes loans to consumers in South Carolina.
Application process: Businesses must submit forms, pay fees, and meet background and financial requirements.
Renewals: Licenses must be renewed annually.
Revocation/suspension: The state can revoke or suspend a license if the company breaks the rules.
B. Loan Terms and Restrictions
Maximum allowable interest rates and fees are set by law.
Limits on loan amounts and repayment terms.
Rules for loan disclosures, like clearly showing the APR (annual percentage rate) and total cost of the loan.
Prohibition of certain practices, such as excessive fees or predatory lending.
C. Recordkeeping and Reporting
Companies must maintain records of loans, payments, and communications with borrowers.
Regular reporting to the Board is required to ensure compliance with the law.
D. Advertising Rules
Any advertisement for loans must be truthful and not misleading.
Must clearly disclose key terms like APR, loan amounts, and repayment schedules.
E. Enforcement and Penalties
The Board has authority to:
Conduct investigations.
Issue fines or sanctions.
Require refunds to borrowers.
Take legal action if a company violates the regulations.
F. Consumer Protections
Borrowers have rights, such as the right to receive full information about loans.
Rules prevent harassment or abusive collection practices.
Protects consumers from unfair or deceptive lending.
4. Who Must Follow Chapter 15?
Any company in South Carolina offering consumer loans, including:
Installment lenders
Payday lenders
Auto title loan companies
Certain credit service organizations
Individuals who engage in loan activities without a license can face penalties.
5. Why It Matters
Chapter 15 protects both the borrower and the state’s financial system:
Ensures that consumers aren’t trapped in unfair or illegal loan agreements.
Maintains a stable financial marketplace by holding lenders accountable.
Provides a legal framework for resolving disputes and enforcing rules.
Summary in Plain Language
Think of Chapter 15 as the rulebook for lenders in South Carolina. If a company wants to make loans to people, it must:
Get a license from the state.
Follow strict rules about loan terms, interest, and fees.
Keep proper records and report to the state.
Treat consumers fairly and honestly.
Face penalties if it breaks the rules.
Essentially, it balances business freedom with consumer protection.
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