Florida Senate - 2021                             CS for SB 1478
       
       
        
       By the Committee on Banking and Insurance; and Senator Gibson
       
       
       
       
       
       597-02914-21                                          20211478c1
    1                        A bill to be entitled                      
    2         An act relating to consumer finance loans; amending s.
    3         516.03, F.S.; authorizing an applicant for a license
    4         to make and collect loans under the Florida Consumer
    5         Finance Act to provide certain documents in lieu of
    6         evidence of liquid assets; amending s. 516.031, F.S.;
    7         prohibiting a person licensed to make and collect
    8         consumer finance loans from charging prepayment
    9         penalties for loans; amending s. 516.05, F.S.;
   10         authorizing an applicant for a license to make and
   11         collect consumer finance loans or a licensee to
   12         provide a surety bond, certificate of deposit, or
   13         letter of credit in lieu of evidence of liquid assets;
   14         providing requirements for such bonds, certificates of
   15         deposit, and letters of credit; providing rulemaking
   16         authority; amending s. 516.07, F.S.; amending grounds
   17         for denial of license or disciplinary action; amending
   18         s. 516.36, F.S.; providing requirements for loan
   19         terms; amending s. 559.952, F.S.; revising exceptions
   20         for a licensee during the Financial Technology Sandbox
   21         period; providing an effective date.
   22          
   23  Be It Enacted by the Legislature of the State of Florida:
   24  
   25         Section 1. Subsection (1) of section 516.03, Florida
   26  Statutes, is amended to read:
   27         516.03 Application for license; fees; etc.—
   28         (1) APPLICATION.—Application for a license to make loans
   29  under this chapter shall be in the form prescribed by rule of
   30  the commission. The commission may require each applicant to
   31  provide any information reasonably necessary to determine the
   32  applicant’s eligibility for licensure. The applicant shall also
   33  provide information that the office requires concerning any
   34  officer, director, control person, member, partner, or joint
   35  venturer of the applicant or any person having the same or
   36  substantially similar status or performing substantially similar
   37  functions or concerning any individual who is the ultimate
   38  equitable owner of a 10-percent or greater interest in the
   39  applicant. The office may require information concerning any
   40  such applicant or person, including, but not limited to, his or
   41  her full name and any other names by which he or she may have
   42  been known, age, social security number, residential history,
   43  qualifications, educational and business history, and
   44  disciplinary and criminal history. The applicant must provide
   45  evidence of liquid assets of at least $25,000 or documents
   46  satisfying the requirements of s. 516.05(10). At the time of
   47  making such application the applicant shall pay to the office a
   48  nonrefundable biennial license fee of $625. Applications, except
   49  for applications to renew or reactivate a license, must also be
   50  accompanied by a nonrefundable investigation fee of $200. An
   51  application is considered received for purposes of s. 120.60
   52  upon receipt of a completed application form as prescribed by
   53  commission rule, a nonrefundable application fee of $625, and
   54  any other fee prescribed by law. The commission may adopt rules
   55  requiring electronic submission of any form, document, or fee
   56  required by this act if such rules reasonably accommodate
   57  technological or financial hardship. The commission may
   58  prescribe by rule requirements and procedures for obtaining an
   59  exemption due to a technological or financial hardship.
   60         Section 2. Subsection (6) is added to section 516.031,
   61  Florida Statutes, to read:
   62         516.031 Finance charge; maximum rates.—
   63         (6)PREPAYMENT PENALTIES PROHIBITED.—A licensee may not
   64  require a borrower to pay a prepayment penalty for paying all or
   65  part of the loan principal before the date on which the payment
   66  is due.
   67         Section 3. Subsection (10) is added to section 516.05,
   68  Florida Statutes, to read:
   69         516.05 License.—
   70         (10)(a) In lieu of the $25,000 liquid asset requirement in
   71  s. 516.03(1):
   72         1.An applicant or a licensee may provide to the office a
   73  surety bond in the amount of at least $25,000, issued by a
   74  bonding company or insurance company authorized to do business
   75  in this state.
   76         2.A company with at least one currently licensed location
   77  must provide to the office a rider or surety bond in the amount
   78  of at least $5,000 for each additional license, issued by a
   79  bonding company or insurance company authorized to do business
   80  in this state. However, in no event may the aggregate amount of
   81  the surety bond required for a company with multiple licenses
   82  exceed $100,000.
   83         (b)In lieu of a surety bond, the applicant or the licensee
   84  may provide evidence of a certificate of deposit or an
   85  irrevocable letter of credit in the same amount of the surety
   86  bond required under paragraph (a). The certificate of deposit
   87  must be deposited in a financial institution, as defined in s.
   88  655.005(1)(i).
   89         (c)The original surety bond, certificate of deposit, or
   90  letter of credit must be filed with the office, and the office
   91  must be named as beneficiary. The surety bond, certificate of
   92  deposit, or letter of credit must be for the use and benefit of
   93  any borrower who is injured by acts of a licensee involving
   94  fraud, misrepresentation, or deceit, including willful
   95  imposition of illegal or excessive charges, or
   96  misrepresentation, circumvention, or concealment of any matter
   97  required to be stated or furnished to a borrower, where such
   98  acts are in connection with a loan made under this chapter. The
   99  office, or any claimant, may bring an action in a court of
  100  competent jurisdiction on the surety bond, certificate of
  101  deposit, or letter of credit. The surety bond, certificate of
  102  deposit, or letter of credit must be payable on a pro rata
  103  basis, but the aggregate amount may not exceed the amount of the
  104  surety bond, certificate of deposit, or letter of credit.
  105         (d)The surety bond, certificate of deposit, or letter of
  106  credit may not be canceled by the licensee, bonding or insurance
  107  company, or financial institution except upon notice to the
  108  office by certified mail. A cancellation may not take effect
  109  until 30 calendar days after receipt by the office of the
  110  written notice.
  111         (e)The bonding or insurance company or financial
  112  institution must, within 10 calendar days after it pays a claim,
  113  give written notice to the office by certified mail of such
  114  payment with details sufficient to identify the claimant and the
  115  claim or judgment paid.
  116         (f)If the principal sum of the surety bond, certificate of
  117  deposit, or letter of credit is reduced by one or more
  118  recoveries or payments, the licensee must furnish to the office
  119  a new or additional surety bond, certificate of deposit, or
  120  letter of credit so that the total or aggregate principal sum
  121  equals the amount required under this subsection. Alternatively,
  122  a licensee may furnish an endorsement executed by the bonding or
  123  insurance company or financial institution reinstating the
  124  required principal amount.
  125         (g)The required surety bond, certificate of deposit, or
  126  letter of credit must remain in place for 2 years after the
  127  licensee ceases licensed operations in this state. During the 2
  128  year period, the office may allow for a reduction or elimination
  129  of the surety bond, certificate of deposit, or letter of credit
  130  to the extent the licensee’s outstanding consumer finance loans
  131  in this state are reduced.
  132         (h)The commission may prescribe by rule forms and
  133  procedures to implement this subsection.
  134         Section 4. Paragraph (b) of subsection (1) of section
  135  516.07, Florida Statutes, is amended to read:
  136         516.07 Grounds for denial of license or for disciplinary
  137  action.—
  138         (1) The following acts are violations of this chapter and
  139  constitute grounds for denial of an application for a license to
  140  make consumer finance loans and grounds for any of the
  141  disciplinary actions specified in subsection (2):
  142         (b) Failure to maintain liquid assets of at least $25,000
  143  or a surety bond, certificate of deposit, or letter of credit in
  144  the amount required by s. 516.05(10) at all times for the
  145  operation of business at a licensed location or proposed
  146  location.
  147         Section 5. Section 516.36, Florida Statutes, is amended to
  148  read:
  149         516.36 Installment requirement.—
  150         (1) Every loan made pursuant to this chapter must be repaid
  151  in periodic installments as nearly equal as mathematically
  152  practicable, except that the final payment may be less than the
  153  amount of the prior installments. Installments may be due every
  154  2 weeks, semimonthly, or monthly. This section does not apply to
  155  lines of credit.
  156         (2)Every loan, including a refinancing, made pursuant to
  157  this chapter on or after October 1, 2021, must have a minimum
  158  loan term of 6 months.
  159         Section 6. Paragraph (a) of subsection (4) of section
  160  559.952, Florida Statutes, is amended to read:
  161         559.952 Financial Technology Sandbox.—
  162         (4) EXCEPTIONS TO GENERAL LAW AND WAIVERS OF RULE
  163  REQUIREMENTS.—
  164         (a) Notwithstanding any other law, upon approval of a
  165  Financial Technology Sandbox application, the following
  166  provisions and corresponding rule requirements are not
  167  applicable to the licensee during the sandbox period:
  168         1. Section 516.03(1), except for the application fee, the
  169  investigation fee, the requirement to provide the social
  170  security numbers of control persons, evidence of liquid assets
  171  of at least $25,000 or documents satisfying the requirements of
  172  s. 516.05(10), and the office’s authority to investigate the
  173  applicant’s background. The office may prorate the license
  174  renewal fee for an extension granted under subsection (7).
  175         2. Section 516.05(1) and (2), except that the office shall
  176  investigate the applicant’s background.
  177         3. Section 560.109, only to the extent that the section
  178  requires the office to examine a licensee at least once every 5
  179  years.
  180         4. Section 560.118(2).
  181         5. Section 560.125(1), only to the extent that the
  182  subsection would prohibit a licensee from engaging in the
  183  business of a money transmitter or payment instrument seller
  184  during the sandbox period.
  185         6. Section 560.125(2), only to the extent that the
  186  subsection would prohibit a licensee from appointing an
  187  authorized vendor during the sandbox period. Any authorized
  188  vendor of such a licensee during the sandbox period remains
  189  liable to the holder or remitter.
  190         7. Section 560.128.
  191         8. Section 560.141, except for s. 560.141(1)(a)1., 3., 7.
  192  10. and (b), (c), and (d).
  193         9. Section 560.142(1) and (2), except that the office may
  194  prorate, but may not entirely eliminate, the license renewal
  195  fees in s. 560.143 for an extension granted under subsection
  196  (7).
  197         10. Section 560.143(2), only to the extent necessary for
  198  proration of the renewal fee under subparagraph 9.
  199         11. Section 560.204(1), only to the extent that the
  200  subsection would prohibit a licensee from engaging in, or
  201  advertising that it engages in, the selling or issuing of
  202  payment instruments or in the activity of a money transmitter
  203  during the sandbox period.
  204         12. Section 560.205(2).
  205         13. Section 560.208(2).
  206         14. Section 560.209, only to the extent that the office may
  207  modify, but may not entirely eliminate, the net worth, corporate
  208  surety bond, and collateral deposit amounts required under that
  209  section. The modified amounts must be in such lower amounts that
  210  the office determines to be commensurate with the factors under
  211  paragraph (5)(c) and the maximum number of consumers authorized
  212  to receive the financial product or service under this section.
  213         Section 7. This act shall take effect October 1, 2021.