Kentucky Legislative Update


The Kentucky legislature recently amended several provisions of its Consumer Loan Company Act (“Act”), effective June 26, 2019.

“Consumer loan company” means a person licensed to engage in the business of making loans to a consumer for personal, family, or household use in the amount or value of $15,000 or less.

The commissioner may take adverse action against a licensee, applicant, or person in control of a licensee or applicant, such as suspending, revoking a license or refusing to issue or renew a license, or issuing a cease-and-desist order.  The amendments provide examples of actions which may warrant such an action.  If the reason for adverse action taken by the commissioner at any one location is generally applicable to all locations operated by a licensee, the commissioner may apply the adverse action to all licenses issued to a licensee.

A licensee may charge a loan processing fee of 5% of the original principal amount of the loan with a maximum of $150.  Any charge collected up to and including $50 is nonrefundable.  In the event of prepayment, any loan processing fee above $50 is subject to refund in the same manner as other charges.  A loan processing fee may only be charged once on a loan or refinance within any 90-day period.

The commissioner will examine the affairs, business, office, and records of every licensee at least once during every 24-month period, but not more frequently than once during every 12-month period.  Every licensee must pay a reasonable fee sufficient to cover the cost of each routine examination based upon fair compensation for time and actual expenses.  The commissioner may also conduct investigations of licensees or persons within or outside of Kentucky as the commissioner deems necessary to discover violations of these provisions or to secure information necessary for proper enforcement.

Every licensee must maintain an agent in Kentucky for service of process. The name, physical address, telephone number, and electronic mail address of the agent must be filed with the application for licensure. The commissioner must be notified in writing by the licensee at least five days prior to any change in the status of an agent.

The following are considered confidential by law and privileged, and are not subject to disclosure under the Kentucky Open Records Act:

  • Reports of examination, and correspondence that relates to a report of examination, of a licensee;
  • Investigations, and records that relate to an investigation;
  • Annual reports; and
  • Any confidential and privileged documents, materials, reports, or information received by the commissioner from other state, federal, or international regulatory agencies or local, state, federal, or international law enforcement authorities.

The amendments also revised, among other things:

  • Application procedures and fees;
  • Bond requirements;
  • Examination procedures; and
  • Procedure for change in control of licensees.

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Diane Jenkins

Director, National Mortgage Compliance Practice Group

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