“(i) Office of Broker Regulation—There is established in the Bureau an Office of Broker Regulation, which shall be responsible for carrying out section 1018.”
“1018. Regulation of brokers
“(a) Definitions—In this section:
“(1) Broker—The term broker means a natural person who—
“(A) is not a creditor or purchaser; and
“(B) solicits and presents offers of commercial financing on behalf of a third party.
“(2) Director—The term Director means the Director of the Bureau of Consumer Financial Protection.
“(3) State—The term State means each of the several States, the District of Columbia, and the territories and possessions of the United States.
“(4) Other terms—The terms small business and small business financing have the meaning given those terms under section 193 of the Truth in Lending Act.
“(b) Regulations
“(1) In general—A broker shall, in facilitating financing offered by a third-party lender for a small business—
“(A) provide the small business with a disclosure containing the information described under paragraph (2); and
“(B) educate the small business on each small business financing option and ensure that the small business reasonably understands the cost and terms of the small business financing as well as the pros and cons of the small business financing decision before the small business enters into a contract for such small business financing.
“(2) Contents of disclosure—Each disclosure required under paragraph (1) shall include:
“(A) A list of all small business financing options for which the small business qualifies through the broker’s services and, with respect to each such small business financing option, the disclosures described under section 193 of the Truth in Lending Act.
“(B) The lowest annual percentage rate option.
“(C) All the lenders to which the broker has sent or will send small business financing applications on the small business’s behalf.
“(D) All compensation that will be paid to the broker, including—
“(i) all charges that will be paid directly or indirectly by the small business; and
“(ii) whether such compensation paid to the broker will be paid up front or financed through the life of the small business financing.
“(E) All conflicts of interest the broker may have.
“(F) A break down and explanation of the broker’s fee structure, including—
“(i) any financial or economic interest the broker has in offering a product to the small business; and
“(ii) whether the broker will receive a higher fee for brokering a certain small business financing over another small business financing.
“(3) Public disclosure of previous borrower results
“(A) Website disclosure—Each broker shall post clearly and prominently on the website of the broker the anonymous and aggregated results of previous small business borrowers who have obtained small business financing through the broker’s services, in terms of annual percentage rate and financing product.
“(B) Brokers without websites—Notwithstanding subparagraph (A), if a broker does not have a website, the broker shall disclose the information described in subparagraph (A) in a paper format, upon request by any small business borrower.
“(4) Small business complaints with respect to brokers—The Director shall—
“(A) collect complaints from small businesses with respect to their experiences with brokers; and
“(B) make such complaints available to the public on the website of the Bureau of Consumer Financial Protection.
“(5) Restriction on best interest claims—A broker that is paid higher fees with certain lenders, small business financing types, or through terms other than the size of the small business financing may not state that the broker is acting in the best interest of the potential small business borrower.
“(6) Prohibition on steering—A loan originator or broker may not steer a small business to small business financing that is not in the small business’s best interest.
“(7) Restrictions on certain fees
“(A) No fee if parties do not come to an agreement—A broker may not charge a small business any fee if—
“(i) the broker is unable to find the small business financing; or
“(ii) the small business chooses not to accept financing through the broker’s services.
“(B) Replacement of existing financing—If a broker or third-party lender offers an existing small business customer new financing, neither the broker nor the third-party lender may charge the small business a new financing charge for the financing being replaced.
“(c) Broker licensing and enforcement
“(1) State broker licensing—A person may only perform the function of a broker in a State if the person is licensed as a broker—
“(A) with respect to a State that has a covered broker licensing law, by the State; or
“(B) with respect to a State that does not have a covered broker licensing law, by the Bureau.
“(2) Covered broker licensing law—With respect to a State, the term covered broker licensing law means a State law that the Director determines meets the following requirements:
“(A) Licensing—The law provides for a process to license brokers operating in the State.
“(B) Prohibition on unlicensed brokers—The law prohibits any person from acting as a broker in the State unless such person is licensed by the State as a broker.
“(C) Prohibition on licensing certain individuals—The law prohibits licensing an individual as a broker if such individual—
“(i) has had a State license revoked for cause in any State;
“(ii) has had a Federal license revoked for cause; or
“(iii) has been convicted of any crime involving lying, deceit, or misappropriation of the truth.
“(D) Limitation on broker employees—The law prohibits a broker from employing any individual, other than a clerical employee, who is described under clause (i), (ii), or (iii) of subparagraph (C).
“(E) Examination—The law requires a licensed broker to undergo State audits and provides for examination of the broker by State regulators.
“(F) Enforcement—With respect to any violation of a State law or regulation in connection with performing the duties of a broker, the law provides for—
“(i) an initial warning being given to the broker;
“(ii) a cure period offered to the broker during which the broker can cure the violation; and
“(iii) if the broker fails to cure the violation, civil or criminal penalties which include—
“(I) the revocation of any broker license granted to the violator; and
“(II) a ban on the violator being granted any other professional license for a period of not less than 5 years.
“(G) Public availability of disciplinary actions—The law requires the State agency in charge of licensing brokers to maintain a website that lists all disciplinary actions taken against brokers.
“(3) Bureau broker licensing—Not later than the end of the 12-month period beginning on the date of enactment of this section, the Director shall establish a Federal broker licensing program that, to the extent practicable, meets the requirements for a covered broker licensing law described under paragraph (2).
“(4) Effective date
“(A) In general—Subsection (a) shall take effect after the end of the 2-year period beginning on the date of enactment of this section.
“(B) Safe harbor—Notwithstanding subsection (a), a person acting as broker in a State on the date of enactment of this section who has applied for a broker license under a State covered broker licensing law (or, with respect to a State that does not have a covered broker licensing law, with the Federal broker licensing program established under paragraph (3)) may continue to act as a broker in such State while the application is pending.
“(d) Rulemaking—The Director may issue such rules as may be necessary to carry out this section.
“(e) Penalties
“(1) Civil penalties—Any person who violates a provision of this section shall—
“(A) be fined not less than $5,000 and not more than $72,000;
“(B) disgorge any funds or other property obtained in connection with such violation;
“(C) in the case of an individual licensed as a broker by the Bureau, have such license suspended for 1 year; and
“(D) in the case of an individual licensed as a broker by the Bureau who has violated a provision of this section previously, have such license permanently revoked.
“(2) Criminal penalty—Any person who violates a provision of this section in an egregious manner shall be fined not more than $5,000,000 or imprisoned not more than 20 years, or both.
“(3) Liability for employer—Any person employing a broker at the time the broker violates a provision of this section shall—
“(A) be fined not more than $853,062;
“(B) disgorge any funds or other property obtained in connection with such violation;
“(C) be prohibited from taking any action involving small business lending or the brokerage industry for not more than 30 business days; and
“(D) in the case of a violation that was in an egregious manner, be prohibited from taking any action involving small business lending or the brokerage industry for more than 30 business days, which may include a permanent prohibition on the person taking any action involving small business lending or the brokerage industry.
“(4) Federal bar for State violators—If an individual has their State broker license revoked by reason of violating a State law or regulation in connection with performing the duties of a broker—
“(A) any professional license granted to the individual by the Federal Government shall be terminated; and
“(B) the individual may not receive a professional license from the Federal Government before the end of the 5-year period beginning on the date of such revocation.
“(5) State enforcement authority—An action to enforce a violation of this section may also be brought by a State attorney general in any appropriate United States district court, or any other court of competent jurisdiction.”