Bill
HB 5290
HB5290 strengthens Illinois SFA oversight by expanding licensing, enforcement powers, and consumer protections, using NMLS for records and stricter penalties.
HB5290 Summary (Illinois, 104th General Assembly)
Purpose and overarching aim
- Reforms the Sales Finance Agency Act to strengthen licensing, supervision, and enforcement of sales finance agencies (SFAs) operating in Illinois.
- Modernizes licensure processes (including use of the Nationwide Multistate Licensing System and Registry, NMLS) and expands Department of Financial and Professional Regulation powers to investigate, discipline, and regulate SFAs.
- Increases penalties for violations and updates rulemaking and appeal processes to provide greater consumer protection and regulatory oversight.
Key provisions and changes
Definitions and scope
- Replaces and clarifies existing definitions for “sales finance agency,” “holder,” “special purpose vehicle,” and related terms to align with current regulatory concepts and NMLS framework.
- Keeps SFAs engaged in purchasing or making loans secured by retail installment contracts or retail charge agreements, including outstanding balances.
Licensing process and requirements (Sections 3.5, 4.1, 4.2, 4.3, 4.4)
- Applicants must use a form prescribed by the Secretary of Financial and Professional Regulation (Secretary), with content defined by Department rules.
- Secretary may enter into arrangements with NMLS or other designated registries to collect and maintain license records and process fees.
- Applications may require background information via NMLS, including independent credit reports and disclosure of administrative, civil, or criminal findings.
- Licenses issued after a comprehensive investigation into: financial responsibility and character of the applicant and managers, and on-going ability to operate honestly and efficiently.
- In addition to standard licensure, applicants must provide judgments, bankruptcy petitions, audited financial statements (or consolidated parent statements with acceptable attestations), and personalized averments regarding solvency, net worth, and fitness.
- Applicants must affirm compliance with ongoing reporting and license maintenance requirements.
Name protection and business entity
- Prohibits SFAs from operating under names other than the real names of the entity and individuals conducting the business (with permitted use of certain legal assumed names per corporate/protected naming acts).
License maintenance and renewal
- Licenses renewed annually on the common renewal date used by NMLS; renewal applications and fees due at defined intervals before expiration.
- Inactive licenses cannot conduct regulated activity; reactivation may occur upon meeting specified conditions and paying fees.
- Provisions for surrender of licenses and post-surrender examination rights.
Fees and funding
- Establishes a detailed fee schedule, including:
- Initial company license application: $1,000; background investigation: $800.
- Annual renewal of company license: $300.
- Initial branch license: $100; annual branch renewal: $100.
- Change of ownership: $1,000; changes of officers/directors/name/address: $50.
- Return-check fee: $50.
- Examination costs billed at $1,200 per examiner day; travel reimbursements for out-of-state examinations.
- Pro rata share of ongoing administrative costs.
- All moneys collected under the Act (related to SFAs) go into the Financial Institution Fund; expenses of administering the Act come from this Fund.
Department powers and procedures
- Expands and clarifies Secretary’s authority to:
- Issue, suspend, condition, or revoke licenses.
- Receive complaints; subpoena and compel testimony; administer oaths.
- Examine licensees and affiliates; require reports; access records; supervise investigations.
- Enter into cooperative examination agreements with other states and regulatory bodies.
- Impose civil penalties (up to $50 per day for failure to respond; up to $75,000 per violation in certain cases) and other sanctions.
- Share confidential supervisory information under defined conditions, preserving privilege and confidentiality where required by law.
- Use protective orders and injunctions to compel compliance in proceedings.
Regulatory safeguards and consumer protections
- Prohibits SFAs from aiding violations of the Retail Installment Sales Act or Automotive Retail Installment Sales Act; restricts purchases of contracts with known violations; restricts purchases of secured contracts from unlicensed or non-exempt sellers.
- Allows for civil actions, attorney’s fees, and costs for violations of the Act.
- Establishes confidentiality protections for sensitive information and authorizes protective sharing with other regulators under strict conditions.
Investigations, examinations, and appeals
- Grants broad investigative and examination authority, including access to criminal history, independent credit reports, and other relevant information.
- Provides for internal appeals within the Department and, for final agency decisions, standard Administrative Procedure Act review and related procedures.
Effective date
- The act takes effect immediately upon becoming law.
Impact and who is affected
- Affects all entities engaged in Illinois as sales finance agencies (SFAs), including their officers, directors, and principals.
- Increases regulatory oversight, reporting, and financial requirements for licensure and ongoing operation.
- Strengthens consumer protections through stricter licensing standards, enhanced examination authority, and stronger penalties for violations.
- Introduces the NMLS framework as a central component of licensing and record-keeping.
Timeline and procedural notes
- Introduced February 10, 2026; advanced through committee processes (Financial Institutions and Licensing) with amendments.
- Passed House floor and moved to Senate in 2026; subject to Senate consideration, readings, and potential further amendments.
- Effective date is immediate upon enactment.
Sponsors
- Primary: Rep. Margaret Croke; Co-sponsors: Rep. Laura Ellman
Overall, HB5290 significantly upgrades Illinois’ regulation of sales finance agencies by expanding licensing requirements, enhancing Departmental enforcement tools, and improving consumer protection mechanisms, while integrating the Nationwide Multistate Licensing System and Registry into the licensing framework.
Compiled from official sources — confirm details with the bill’s official record.
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