SB 1096 - This act modifies various provisions relating to the regulation of certain financial institutions. This act is substantially similar to provisions in SCS/HB 2571 (2022).
Authority of the Division of Finance
The act stipulates that the Division of Finance is in charge of the execution of the laws relating to banks, trust companies, and the banking business of the state; laws relating to persons and entities engaged in the small loan or consumer credit business in the state; the laws relating to persons and entities engaged in the mortgage business in the state; and the laws relating to persons and entities engaged in any other financial services related to business over which the Division of Finance is granted express authority.
Responsibilities of the Division of Finance - State Banking and Savings and Loan Board
The act provides that the compensation and necessary travel and other expenses of the members of the State Banking and Savings and Loan Board shall be paid out of the Division of Finance Fund.
Current law provides that a majority of the members of the State Banking and Savings and Loan Board constitutes a quorum. This act provides that three members of the board shall constitute a quorum.
The Division is permitted to provide administrative services to the Board to assist the Board with fulfilling its statutory responsibilities.
Bulletins and Industry Letters Issued by Division of Finance
The act permits the Division to issue bulletins addressing the business of individuals and entities licensed, chartered, or regulated by the Division. Bulletins do not have the force or effect of law and should not be considered statements of general applicability.
The act also permits the Division to issue industry letters. Industry letters may be issued, in the discretion of the director of the Division, at the request of an individual or entity licensed, chartered, or regulated by the Division, and that seeks the Division's position on an application of law. The act details the requirements that must be met in issuing an industry letter. Industry letters are binding on the Division and the requesting party shall not be subject to any administrative proceeding or penalty for any acts or omissions done in reliance on an industry letter, provided there is no change in any material fact or law or the discovery of a material misrepresentation or omission made by the requesting party.
Reports of Examinations of Banks and Trust Companies
The act repeals an obsolete requirement that the result of all examinations of banks and trust companies during a biennial period be embodied in a report made by the Director of the Department of Commerce and Insurance to the General Assembly, such reporting requirement having previously been repealed.
Notices of Charges and Cease and Desist Orders
The act clarifies the requirements for issuing a notice of charges with respect to a director, officer, employee, agent, or other person participating in the affairs of a bank or trust company regulated by the Division under Chapter 361. Specifically, whenever the director has reason to believe from any examination or investigation made by the director or his or her examiners, that any such corporation, foreign corporation, or director, officer, employee, agent, or other person participating in the conduct of the affairs of such corporation is engaging in, has engaged in, or is about to engage in:
· An unsafe or unsound practice in conducting the business of such corporation;
· A violation of law, rule, or director-imposed written condition;
· A violation of any written agreement entered into with the director; or
· A violation of the corporation's charter,
the director may issue and serve upon the corporation or
such director, officer, employee, agent, or other person a
notice of charges in respect thereof.
Any cease and desist order issued by the Division in response to one of the above-described charges is subject to the following:
· It may require the corporation or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such corporation to cease and desist from such actions, violations, or practices;
· It may require the corporation or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such corporation to take affirmative action to correct the conditions resulting from any such actions, violations, or practices;
· It shall require that, if the director determines that the capital of the corporation is impaired, the corporation make good the deficiency forthwith or within a time specified in the order;
· It may, if the director determines that the corporation does not keep adequate records, determine and prescribe such books of account as the director, in his or her discretion, shall require of the corporation for the purpose of keeping accurate and convenient records of the transactions and accounts; and
· It shall, if the director determines that wrong entries or unlawful uses of the funds of the corporation have been made, order that the entries shall be corrected, and the sums unlawfully paid out be restored by the person or persons responsible for the wrongful or illegal payment thereof.
Notice of Removal from Office
The act modifies the process for serving a notice of intention to remove a person from office in a bank or trust company regulated by the Division under Chapter 361.
Fees Collected by Division of Finance
(Sections 361.715, 364.030, 364.105, 365.030, 367.140, 407.640, 408.500)
The act modifies the following fees collected by the Division of Finance:
· From $300 to $350, the annual fee paid by persons seeking a license to issue checks. (Section 361.715.2);
· The maximum fee that may be charged for any application to amend and reissue an existing license to issue checks is increased from $300 to $350. (Section 361.715.3);
· From $500 to $550, the annual license fee for each place of business of a financial institution licensed under state law. (Section 364.030.3);
· From $500 to $550, the annual registration fee for a premium finance company. (Section 364.105.2);
· From $500 to $550, the annual license fee for each place of business of a sales finance company. (Section 365.030.3);
· From $500 to $550, the fee paid by lenders of consumer credit loans when filing an application for certificate of registration. (Section 367.140.1);
· The maximum fee that may be charged a credit services organization when filing a registration statement with the Director of the Division is increased from $300 to $350. (Section 407.640.5); and
· From $500 to $550, the annual license fee charged to lenders, other than banks, trust companies, credit unions, savings banks and savings and loan companies, in the business of making unsecured loans of $500 or less. (Section 408.500.1).