Legislative Analysis
Phone: (517) 373-8080
House Bills 5354 and 5363 as introduced Analysis available at
Sponsor: Rep. Phil Skaggs http://www.legislature.mi.gov
House Bills 5355 and 5357 as introduced
Sponsor: Rep. Jasper R. Martus
House Bills 5356 and 5366 as introduced
Sponsor: Rep. Julie Brixie
House Bills 5358 and 5359 as introduced House Bills 5362 and 5364 as introduced
Sponsor: Rep. Jason Morgan Sponsor: Rep. Sharon MacDonell
House Bills 5360 and 5361 as introduced House Bills 5365 and 5367 as introduced
Sponsor: Rep. Christine Morse Sponsor: Rep. Donavan McKinney
Committee: Insurance and Financial Services
Complete to 5-15-24
House Bill 5354 would amend the Motor Vehicle Sales Finance Act to make several changes
regarding the licensing of sales finance companies and installment sellers and the penalties
prescribed by the act. The bill would also make numerous technical and editorial changes.
Application for Sales Finance Company or Installment Seller License
The bill would make several changes regarding the application for and renewal of sales finance
company licenses or installment seller of motor vehicles licenses under the act.
Currently, applications for renewal are due on or before the June 16 preceding the renewal
period and licenses expire annually on July 1.
The bill would change the renewal application date to the December 1 preceding the renewal
period, with licenses now expiring on December 31 annually. If a licensee had a change to the
information on file with the Department of Insurance and Financial Services (DIFS) with their
renewal application, they would have to notify the department within 30 days of the change.
In addition, a license would not be renewed if the applicant fails to pay the renewal fee
established by the bill (described below). If the fee is not received on or before January 31, the
licensee would be subject to a $25 fee per day, up to a maximum of $1,000 (i.e., 40 days).
Applicants for initial licensure or a license renewal as an installment seller could request an
extended licensing period of up to four years. DIFS would have to deny the extended licensing
period if the applicant had failed to pay any required fee at the time of the request.
House Fiscal Agency Page 1 of 8
Bond Requirements
Currently, the act requires each sales finance company licensee to have a surety bond of
$20,000, plus $10,000 for each additional location. However, licensees that are also licensed
under various other acts are only required to have bonds worth $5,000 (plus an additional
$5,000 for each additional location).
The bill would eliminate the provision allowing for lower bond amounts for those licensees.
License Fees
The bill would eliminate the current license fee schedule and authorize the DIFS director to
annually establish license and contract fees for each calendar year. The fees would be set as an
amount necessary to pay, but not exceed, the department’s reasonably anticipated costs of
administering the act. The bill would require these fees to be set as follows:
Category Current Fee Proposed Fee
(if applicable)
Obtain or renew an $30 Up to $150 plus up to $50
installment seller license per additional location
Installment seller extended N/A Annual license fee
licensing period multiplied by number of
years in extended period
Obtain or renew a sales $150, plus $75 per Up to $500 plus $50 per
finance company license additional location or (for additional location
financial institutions) $35
per licensed location
Amend existing license N/A Up to $150
The bill would also require DIFS to establish a contract fee for each installment sale executed
by a licensee, to be collected by the licensee and deposited in the Motor Vehicle Sales Finance
Act Fund (described below). The fee would have to be set by July 1 annually as a whole number
increment from $2 to $5.
Finally, the bill would eliminate the current requirement that a licensee pay an examination fee
for any examination of its records conducted by DIFS.
Contracting with NMLS
The bill would authorize the DIFS director to establish relationships or contracts with the
Nationwide Multistate Licensing System (NMLS), 1 or any other authorized party, to collect
and maintain records and process transaction fees or other fees related to licensed installment
sellers or sales finance companies or other persons subject to the act.
Specifically, DIFS could use the NMLS for any of the following:
• Requesting information from and distributing information to the U.S. Department of
Justice or any governmental agency.
• Requesting and distributing information to and from any source as directed by the DIFS
House Fiscal Agency HBs 5354 to 5367 as introduced Page 2 of 8
Control Person Requirements
The bill would add a requirement that every control person or individual seeking to become a
control person of a sales finance company applicant or licensee submit the following to DIFS
through the NMLS:
• The individual’s fingerprints for submission to the Federal Bureau of Investigation for
a state and national criminal history background check, unless the control person
currently resides, and for the last 10 years has resided, outside of the United States.
• Authorization for DIFS to receive the state and national criminal history background
checks described above.
• The individual’s personal history and experience, in a form prescribed by DIFS, which
would have to include all of the following:
o An independent credit report from a consumer reporting agency, unless the
control person does not have a Social Security number.
o Information related to any criminal convictions or pending charges against the
o Information related to any regulatory or administrative action or any civil
litigation involving fraud, misrepresentation, conversion, mismanagement of
funds, breach of fiduciary duty, or breach of contract.
Control person would mean an individual that has the power to do any of the following:
• Vote, directly or indirectly, at least 10% of the outstanding voting shares or
voting interests of a sales finance company applicant or licensee or a person in
control of the applicant or licensee.
• Elect or appoint executive officers, managers, directors, trustees, or other
persons that exercise managerial authority of a person in control of a sales
finance company applicant or licensee.
• Exercise, directly or indirectly, a controlling influence over the management or
policies of a sales finance company applicant or licensee or a person in control
of the applicant or licensee.
Evidence of compliance with these requirements would be required to be included with each
application for a sales finance company license.
Motor Vehicle Sales Finance Act Fund
Currently, the act allocates funds from the act to the Financial Institution Bureau to be used for
its operations.
The bill would eliminate this earmark and require all money and assets received under the act
to be deposited in the newly created Motor Vehicle Sales Finance Act Fund. The state treasurer
would direct the investment of the fund, and DIFS would be the administrator for audit
DIFS would expend money from the fund, upon appropriation, only to administer and enforce
the act and to pay other costs associated with its regulatory obligations. Money would not lapse
into the general fund at the close of a fiscal year.
Transfer of License
Currently, the act provides that licenses are not transferrable or assigned.
House Fiscal Agency HBs 5354 to 5367 as introduced Page 3 of 8
The bill would allow a license to be transferred or assigned with the consent of the DIFS
director (provided that the relevant fees are paid). Either of the following would be considered
the transfer of a license:
• The sale, transfer, assignment, or conveyance of more than 25% of the outstanding
voting stock of a licensee that is a corporation.
• The sale, transfer, assignment, or conveyance of more than 25% of the interest in a
licensee that is a partnership or other unincorporated association.
Examinations and Investigations
Currently, the act allows DIFS to investigate and examine the records of a licensee.
The bill would provide that, if the examination is a routine examination, the department would
have to do both of the following:
• Provide the licensee with at least 36 hours’ written notice of the examination.
• Maintain a record of the delivery of the notice described above in the examination
Routine examination would mean an examination that is not the result of a complaint
or a suspected violation of the act.
Written notice would include notice by email or text message.
DIFS would also be authorized to conduct unannounced, periodic, on-site investigations in
response to a complaint.
For the purposes of examinations and investigations, the bill would authorize the department
to do all of the following:
• Enter into agreements or relationships with other government officials or regulatory
associations to share resources, standardized or uniform methods or procedures, and
documents, records, information, or evidence obtained during an examination or
• Use, hire, contract, or employ public or privately available analytical systems, methods,
or software.
• Accept and rely on examination or investigation reports made by other state or federal
government officials.
• Accept audit reports prepared by an independent certified public accountant in the
course of that part of the examination covering the same general subject matter as the
audit and incorporate the audit report into the report of the examination, report of
investigation, or other writing of the department.
The bill would prohibit DIFS or any current or past staff from disclosing any facts and
information obtained in the course of their duties, unless that individual is required under law
to report on, take official action concerning, or testify in any proceedings regarding a licensee.
This prohibition would not apply to the furnishing of information or documents to any federal,
foreign, or out-of-state regulatory agency with jurisdiction over a licensee and would not apply
to any disclosure made in the public interest at the discretion of the DIFS director.
House Fiscal Agency HBs 5354 to 5367 as introduced Page 4 of 8
Preservation of Records and Reports
Currently, the act requires licensees to maintain certain books, accounts, and other records that
may be used by DIFS to determine if they are in compliance with the act for at least two years
after the final entry in them is made.
The bill would allow these records to be kept at a location other than the licensee’s principal
place of business, as long as they are made available to DIFS upon request. If the records are
kept out of state, the licensee would have to pay the reasonable travel, lodging, and meal
expenses of any person required to travel to examine them. The bill would require DIFS to
accept any record or document electronically, if possible and practical.
In addition, the bill would require a licensee to file a report with DIFS providing information,
as required by DIFS, about the business and operations of the licensee. The report would be
due on or before a date determined by, and in a form prescribed by, the DIFS director. If a
report is not received by the prescribed date, the licensee would be subject to a $25 fee per day,
up to a maximum of $1,000.
Any individual that willfully and knowingly subscribes and affirms a false statement in a report
would be subject to all penalties under the act.
Violations/Cease and Desist Orders
Currently, the act allows the DIFS director to revoke or suspend a license if they determine
that any of the following apply:
• The licensee has made any material misstatement in the application for license.
• The licensee has violated any provisions of the act.
• The licensee refuses or has refused to allow DIFS to make examinations authorized by
the act.
• The licensee, if a sales finance company, has failed to maintain in effect the bond
required under the act.
• The licensee has failed to maintain satisfactory records required by the act.
• The licensee has falsified records required to be maintained by the act.
• The licensee has, after proper notice, failed to file any report with DIFS within the time
stipulated in the act.
• The licensee has failed to pay the fine required by the act for failure to file reports to
DIFS within the time stipulated.
• The licensee has defrauded any retail buyer to the buyer’s damage or has willfully
failed to perform any written agreement with any retail buyer.
• Any fact or condition exists or is discovered that would have warranted the refusal to
issue the license if it had existed or been discovered when the application was filed.
In addition to this authority, the bill would authorize DIFS, in the circumstances described
above, to order the licensee to cease and desist or to assess a civil fine, as established by the
Issuing a Cease and Desist Order
The bill would authorize DIFS to issue and serve a cease order to a licensee if it determines
that the licensee is or has engaged in a practice that poses a threat of financial loss or threat to
the public welfare, or is or has violated a law, rule, or order.
House Fiscal Agency HBs 5354 to 5367 as introduced Page 5 of 8
The cease and desist order would have to contain a statement of the facts constituting the
alleged practice or violation and establish a time and place for a hearing to determine if an
order to cease and desist should be issued.
Licensees could consent to a cease and desist order under the bill. If a licensee, or their
representative, failed to appear at the scheduled hearing, they would be considered to have
consented to the issuance of a cease and desist order.
If a licensee consents to the order or the department finds that the practice or violation specified
in the initial order is established, the cease and desist order would become final. The final order
would become effective on the date of service, except to the extent that it is stayed, modified,
terminated, or set aside by the department or a court. Orders consented to by the licensee would
be effective at the time specified and would remain effective and enforceable as provided in
the order.
Finalized orders could require the licensee and its officers, directors, members, partners,
trustees, employees, agents, or control persons to cease and desist from the specified practice
or violation and to take affirmative action to correct the conditions resulting from it.
The bill would authorize the following penalties for violations of the act:
• A civil fine of up to $15,000 for a person that intentionally makes a false statement,
misrepresentation, or false certification in a record or document filed or required to be
maintained under the act or that intentionally makes a false entry or omits a material
entry in a record.
• A felony punishable by up to three years in prison and a fine or up to $15,000, or both,
for a person that knowingly engages without a license in an activity for which a license
is required under the act.