Senate Bill sb2084c1
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Florida Senate - 2007 CS for SB 2084
By the Committee on Banking and Insurance; and Senator Bennett
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1 A bill to be entitled
2 An act relating to financial services; amending
3 s. 520.02, F.S.; defining the term "guaranteed
4 asset protection products"; amending s. 520.07,
5 F.S.; setting forth requirements and
6 prohibitions for selling guaranteed asset
7 protection products; amending s. 520.35, F.S.;
8 revising the fee for a delinquency charge;
9 amending s. 624.605, F.S.; including
10 debt-cancellation products under casualty
11 insurance; providing a definition; authorizing
12 certain entities to offer debt-cancellation
13 products under certain circumstances;
14 specifying that such products are not
15 insurance; amending ss. 627.553 and 627.679,
16 F.S.; revising limitations on the amount of
17 authorized insurance for debtors; amending s.
18 627.681, F.S.; revising a limitation on the
19 term of credit disability insurance; amending
20 s. 655.005, F.S.; redefining the terms "federal
21 financial institution" and "financial
22 institution"; defining the term
23 "debt-cancellation products"; amending s.
24 655.79, F.S.; providing that a deposit account
25 by a husband and wife is a tenancy by the
26 entirety; creating s. 655.947, F.S.; providing
27 a definition; authorizing financial
28 institutions to offer debt-cancellation
29 products; authorizing a fee; requiring the
30 Financial Services Commission to adopt rules;
31 providing that a periodic payment option is not
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1 required for certain debt-cancellation
2 products; amending s. 655.954, F.S.;
3 authorizing a financial institution to offer a
4 debt-cancellation product but not as a
5 requirement of receiving a loan; amending s.
6 658.21, F.S.; revising an ownership of capital
7 criterion for capital accounts at financial
8 institutions and one-bank holding companies;
9 amending s. 658.34, F.S.; prohibiting certain
10 stock issuance practices for banks; amending s.
11 658.36, F.S.; requiring a state bank or trust
12 company to file a written notice before
13 increasing its capital stock; amending s.
14 658.44, F.S.; revising criteria for determining
15 the value of dissenting shares of certain
16 entities; providing an effective date.
17
18 Be It Enacted by the Legislature of the State of Florida:
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20 Section 1. Present subsections (7) through (19) of
21 section 520.02, Florida Statutes, are redesignated as
22 subsections (8) through (20), respectively, and a new
23 subsection (7) is added to that section, to read:
24 520.02 Definitions.--In this act, unless the context
25 or subject matter otherwise requires:
26 (7) "Guaranteed asset protection products" means loan,
27 lease, or retail installment contract terms, or modifications
28 or addendums to loan, lease, or retail installment contracts,
29 under which a creditor agrees to waive a customer's liability
30 for payment of some or all of the amount by which the debt
31 exceeds the value of the collateral. This product is not
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1 insurance for purposes of the Florida Insurance Code. This
2 subsection applies to all such guaranteed asset protection
3 products issued before October 1, 2007.
4 Section 2. Subsection (11) is added to section 520.07,
5 Florida Statutes, to read:
6 520.07 Requirements and prohibitions as to retail
7 installment contracts.--
8 (11) In conjunction with entering into a new retail
9 installment contract or contract for a loan, a motor vehicle
10 retail installment seller, as defined in s. 520.02(10), sales
11 finance company, as defined in s. 520.02(18), or retail
12 lessors, as defined in s. 521.003(8), and their assignees may
13 offer, for a fee or otherwise, optional guaranteed asset
14 protection products in accordance with this chapter. The motor
15 vehicle retail installment seller, sales finance company, or
16 retail lessor may not require the purchase of a guaranteed
17 asset protection product as a condition for making the loan.
18 In order to offer any guaranteed asset protection product, the
19 motor vehicle retail installment seller, sales finance
20 company, or retail lessor, and their assignees, must comply
21 with the following:
22 (a) The cost of a guaranteed asset protection product,
23 with respect to any loan covered by the product, may not
24 exceed the amount of the indebtedness.
25 (b) Any contract or agreement pertaining to a
26 guaranteed asset protection product is governed by this
27 section.
28 (c) The guaranteed asset protection product is
29 considered an obligation of any person who purchases or
30 otherwise acquires the loan contract covering the product.
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1 (d) Entities providing guaranteed asset protection
2 products shall provide readily understandable disclosures that
3 detail eligibility requirements, conditions, refunds, and
4 exclusions. The disclosures must state that the purchase of
5 the product is optional. The disclosures must be in plain
6 language and of a type face and size that are easy to read.
7 (e) Entities must provide a copy of the executed
8 guaranteed asset protection product contract to the buyer. The
9 entity bears the burden of proving that the contract was
10 provided to the buyer.
11 (f) Entities may not offer a contract for a guaranteed
12 asset protection product which contains terms giving the
13 entity the right to unilaterally modify the contract unless:
14 1. The modification is favorable to the buyer and is
15 made without an additional charge to the buyer; or
16 2. The buyer is notified of any proposed change and is
17 provided a reasonable opportunity to cancel the contract
18 without penalty before the change takes effect.
19 (g) If a contract for a guaranteed asset protection
20 product is terminated, the entity must refund to the buyer any
21 unearned fees paid for the contract unless the contract
22 provides otherwise. A refund is not due to a consumer who
23 receives a benefit under such product. In order to receive a
24 refund, the buyer must notify the entity of the event
25 terminating the contract and request a refund within 90 days
26 after the occurrence of the event terminating the contract.
27 Any entity may offer a buyer a contract that does not provide
28 for a refund only if the entity also offers that buyer a bona
29 fide option to purchase a comparable contract that provides
30 for a refund.
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1 Section 3. Subsection (3) of section 520.35, Florida
2 Statutes, is amended to read:
3 520.35 Revolving accounts.--
4 (3) Notwithstanding the provisions of any other law,
5 the seller under a revolving account may charge, receive, and
6 collect a finance charge which may not exceed 15 cents per $10
7 per month, computed on all amounts unpaid under the revolving
8 account from month to month (which need not be a calendar
9 month) or other regular period, and a delinquency charge not
10 to exceed $25 $10 for each payment in default for a period of
11 not less than 10 days, if the charge is agreed upon, in
12 writing, between the parties before imposing any charge. If
13 the amount of the finance charge so computed is less than $1
14 for any such month, a finance charge of $1 for any such month
15 may be charged, received, and collected. If the regular
16 period is other than such monthly period or if the unpaid
17 amount is less than or greater than $5, the permitted finance
18 charge shall be computed proportionately. Such finance charge
19 may be computed for all unpaid balances within a range of not
20 in excess of $10 on the basis of the median amount within such
21 range, if as so computed such finance charge is applied to all
22 unpaid balances within such range.
23 Section 4. Paragraph (r) is added to subsection (1) of
24 section 624.605, Florida Statutes, to read:
25 624.605 "Casualty insurance" defined.--
26 (1) "Casualty insurance" includes:
27 (r) Insurance for debt-cancellation
28 products.--Insurance that a creditor may purchase against the
29 risk of financial loss from the use of debt-cancellation
30 products with consumer loans, leases, or retail installment
31 contracts.
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1 1. For purposes of this paragraph, the term
2 "debt-cancellation product" means loan, lease, or retail
3 installment contract terms, or modifications to loan, lease,
4 or retail installment contracts, under which a creditor agrees
5 to cancel or suspend all or part of a customer's obligation to
6 make payments upon the occurrence of specified events and
7 includes, but is not limited to, debt-cancellation contracts,
8 debt-suspension agreements, and guaranteed asset-protection
9 contracts.
10 2. Debt-cancellation products may be offered by
11 financial institutions, as defined in s. 655.005(1)(h),
12 insured depository institutions, as defined in 12 U.S.C. s.
13 1813(c), and subsidiaries of such institutions, as provided in
14 the financial institution codes, or by other business entities
15 as may be specifically authorized by law, and such products
16 are not insurance for purposes of the Florida Insurance Code.
17 Section 5. Subsection (3) of section 627.553, Florida
18 Statutes, is amended to read:
19 627.553 Debtor groups.--The lives of a group of
20 individuals may be insured under a policy issued to a creditor
21 or its parent holding company, or to a trustee or trustees or
22 agent designated by two or more creditors, which creditor,
23 holding company, affiliate, trustee or trustees, or agent
24 shall be deemed the policyholder, to insure debtors of the
25 creditor or creditors, subject to the following requirements:
26 (3) The amount of insurance on the life of any debtor
27 shall at no time exceed the amount owed by the debtor her or
28 him which is repayable in installments to the creditor or
29 $50,000, whichever is less, except that loans not exceeding 1
30 year's duration shall not be subject to such limits. However,
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1 on such loans not exceeding 1 year's duration, the limit of
2 coverage shall not exceed $50,000 with any one insurer.
3 Section 6. Paragraph (b) of subsection (1) of section
4 627.679, Florida Statutes, is amended to read:
5 627.679 Amount of insurance; disclosure.--
6 (1)
7 (b) The total amount of credit life insurance on the
8 life of any debtor with respect to any loan or loans covered
9 in one or more insurance policies shall at no time exceed the
10 amount of indebtedness $50,000 with any one creditor, except
11 that loans not exceeding 1 year's duration shall not be
12 subject to such limits, and on such loans not exceeding 1
13 year's duration, the limits of coverage shall not exceed
14 $50,000 with any one insurer.
15 Section 7. Subsection (2) of section 627.681, Florida
16 Statutes, is amended to read:
17 627.681 Term and evidence of insurance.--
18 (2) The term of credit disability insurance on any
19 debtor insured under this section shall not exceed the term of
20 indebtedness 10 years, and for credit transactions that exceed
21 60 months, coverage shall not exceed 60 monthly indemnities.
22 Section 8. Paragraphs (g) and (h) of subsection (1) of
23 section 655.005, Florida Statutes, are amended, and paragraph
24 (t) is added to that subsection, to read:
25 655.005 Definitions.--
26 (1) As used in the financial institutions codes,
27 unless the context otherwise requires, the term:
28 (g) "Federal financial institution" means a federally
29 or nationally chartered or organized financial institution
30 association, bank, savings bank, or credit union.
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1 (h) "Financial institution" means a state or federal
2 savings or thrift association, bank, savings bank, trust
3 company, international bank agency, international banking
4 organization, international branch, international
5 representative office, or international administrative office,
6 or credit union, or an agreement corporation operating under
7 s. 25 of the Federal Reserve Act, 12 U.S.C. ss. 601 et seq.,
8 or an Edge Act corporation organized under s. 25(a) of the
9 Federal Reserve Act, 12 U.S.C. ss. 611 et seq.
10 (t) "Debt-cancellation products" means loan, lease, or
11 retail installment contract terms, or modifications or addenda
12 to loan, lease, or retail installment contracts, under which a
13 creditor agrees to cancel or suspend all or part of a
14 customer's obligation to make payments upon the occurrence of
15 specified events and includes, but is not limited to,
16 debt-cancellation contracts, debt-suspension agreements, and
17 guaranteed asset-protection contracts offered by financial
18 institutions, insured depository institutions, as defined in
19 12 U.S.C. s. 1813(c), and subsidiaries of such institutions.
20 Section 9. Subsection (1) of section 655.79, Florida
21 Statutes, is amended to read:
22 655.79 Deposits and accounts in two or more names;
23 presumption as to vesting on death.--
24 (1) Unless otherwise expressly provided in a contract,
25 agreement, or signature card executed in connection with the
26 opening or maintenance of an account, including a certificate
27 of deposit, a deposit account in the names of two or more
28 persons shall be presumed to have been intended by such
29 persons to provide that, upon the death of any one of them,
30 all rights, title, interest, and claim in, to, and in respect
31 of such deposit account, less all proper setoffs and charges
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1 in favor of the institution, vest in the surviving person or
2 persons. Any deposit or account made in the name of two
3 persons who are husband and wife shall be considered a tenancy
4 by the entirety unless otherwise specified in writing.
5 Section 10. Section 655.947, Florida Statutes, is
6 created to read:
7 655.947 Debt-cancellation products.--
8 (1) Debt-cancellation products may be offered, and a
9 fee may be charged, by financial institutions and subsidiaries
10 of financial institutions subject to this section and the
11 rules and orders of the commission or office. As used in this
12 section, the term "financial institutions" includes those
13 institutions defined in s. 655.005(1), insured depository
14 institutions, as defined in 12 U.S.C. s. 1813, and
15 subsidiaries of these institutions.
16 (2) A financial institution must manage the risks
17 associated with debt-cancellation products in accordance with
18 prudent safety and soundness principles. A financial
19 institution must establish and maintain effective
20 risk-management and control processes over its
21 debt-cancellation products and programs. These processes must
22 include appropriate recognition and financial reporting of
23 income, expenses, assets, and liabilities, and appropriate
24 treatment of all expected and unexpected losses associated
25 with the products. Each financial institution should also
26 assess the adequacy of its internal control and risk-
27 mitigation activities in view of the nature and scope of its
28 debt-cancellation products and programs.
29 (3) The commission shall adopt rules pursuant to ss.
30 120.536(1) and 120.54 to administer this section, which rules
31 must be consistent with 12 C.F.R. part 37, as amended.
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1 (4) For purposes of this section and any rules adopted
2 pursuant to this section, a periodic payment option is not
3 required to be offered for any debt-cancellation product
4 designed to protect a customer against a deficiency between
5 the outstanding loan or lease amount and the value of the
6 motor vehicle that is used as collateral for the loan or
7 lease.
8 Section 11. Section 655.954, Florida Statutes, is
9 amended to read:
10 655.954 Financial institution loans; credit cards.--
11 (1) Notwithstanding any other provision of law, a
12 financial institution shall have the power to make loans or
13 extensions of credit to any person on a credit card or
14 overdraft financing arrangement and to charge, in any billing
15 cycle, interest on the outstanding amount at a rate that is
16 specified in a written agreement, between the financial
17 institution and borrower, governing the credit card account.
18 Such credit card agreement may modify any terms or conditions
19 of such credit card account upon prior written notice of such
20 modification as specified by the terms of the agreement
21 governing the credit card account or by the Truth in Lending
22 Act, 15 U.S.C. ss. 1601 et seq as amended, and the rules and
23 regulations adopted thereunder. Any such notice provided by a
24 financial institution shall specify that the borrower has the
25 right to surrender the credit card whereupon the borrower
26 shall have the right to continue to pay off the borrower's
27 credit card account in the same manner and under the same
28 terms and conditions as then in effect. The borrower's
29 failure to surrender the credit card prior to the
30 modifications becoming effective shall constitute a consent to
31 the modifications.
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1 (2) In conjunction with entering into any contract or
2 agreement for a loan, line of credit, or loan extension, a
3 financial institution, an insured depository institution, as
4 defined in 12 U.S.C. s. 1813, and subsidiaries of these
5 institutions, may offer, for a fee or otherwise, optional
6 debt-cancellation products under s. 655.947 and the rules
7 adopted under that section. The financial institution may not
8 require a person to purchase a debt-cancellation product as a
9 condition for a loan, line of credit, or loan extension.
10 (3)(2) For the purpose of this section, the term:
11 (a) "Billing cycle" has the same meaning as ascribed
12 to it under the federal Truth in Lending Act, as amended, 15
13 U.S.C. ss. 1601 et seq., and the associated regulations which
14 are in effect as of June 30, 2007 1992.
15 (b) "Interest" means those charges considered a
16 finance charge under the federal Truth in Lending Act, as
17 amended, 15 U.S.C. ss. 1601 et seq., and the associated
18 regulations which are in effect as of June 30, 2007 1992.
19 Section 12. Subsection (2) of section 658.21, Florida
20 Statutes, is amended to read:
21 658.21 Approval of application; findings
22 required.--The office shall approve the application if it
23 finds that:
24 (2) The proposed capitalization is in such amount as
25 the office deems adequate, but in no case may the total
26 capital accounts at opening for a bank be less than $8 $6
27 million if the proposed bank is to be located in any county
28 which is included in a metropolitan statistical area, or $4
29 million if the proposed bank is to be located in any other
30 county. The total capital accounts at opening for a trust
31 company may not be less than $3 $2 million. The organizing
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1 directors of the proposed bank must directly own or control at
2 least the lesser of $3 million or 25 percent of the bank's
3 total capital accounts proposed at opening as approved by the
4 office. If the proposed bank will be owned by a single-bank
5 holding company, the organizing directors of the proposed bank
6 collectively must directly own or control at least an amount
7 of the single-bank holding company's capital accounts equal to
8 the lesser of $3 million or 25 percent of the proposed bank's
9 total capital accounts proposed at opening as approved by the
10 office. If the proposed bank will be owned by an existing
11 multibank holding company, the proposed directors must have a
12 substantial capital investment in the holding company, as
13 determined by the office. However, the investment is not
14 required to exceed the amount otherwise required for a
15 single-bank holding company application. Of total capital
16 accounts at opening, as noted in the application or amendments
17 or changes to the application, at least 25 percent of the
18 capital shall be directly owned or controlled by the
19 organizing directors of the bank. Directors of banks owned by
20 single-bank holding companies shall have direct ownership or
21 control of at least 25 percent of the bank holding company's
22 capital accounts. The office may disallow illegally obtained
23 currency, monetary instruments, funds, or other financial
24 resources from the capitalization requirements of this
25 section. The proposed stock offering must comply with the
26 requirements of ss. 658.23-658.25 and 658.34-658.37.
27 Section 13. Section 658.34, Florida Statutes, is
28 amended to read:
29 658.34 Shares of capital stock.--
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1 (1) A bank or trust company shall issue its capital
2 stock with par value of not more than $100 nor less than $1
3 per share.
4 (2) A No bank or trust company may not shall issue any
5 shares of capital stock at a price less than par value, and
6 prior to issuance, any such shares must be fully paid in cash.
7 (3) With the approval of the office, a bank or trust
8 company may issue preferred stock of one or more classes in an
9 amount and with a par value as approved by the office.
10 (4) With the approval of the office, a bank or trust
11 company may issue less than all the number of shares of any of
12 its capital stock authorized by its articles of incorporation.
13 Such authorized but unissued shares may be issued only for the
14 following purposes:
15 (a) To provide for stock options and warrants as
16 provided in s. 658.35.
17 (b) To declare or pay a stock dividend; however, any
18 such stock dividend must comply with the provisions of this
19 section and s. 658.37.
20 (c) To increase the capital of the bank or trust
21 company, with the approval of the office.
22 (5) A financial institution may not issue or sell
23 stock of the same class which creates different rights,
24 options, warrants, or benefits among the purchasers or
25 stockholders of that class of stock. This subsection does not
26 prohibit the financial institution from creating uniform
27 restrictions on the transfer of stock as permitted in s.
28 607.0627.
29 Section 14. Subsection (2) of section 658.36, Florida
30 Statutes, is amended to read:
31 658.36 Changes in capital.--
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1 (2) A Any state bank or trust company may, with the
2 approval of the office, provide for an increase in its capital
3 stock only if the state bank or trust company files a written
4 notice 15 days before the increase.
5 Section 15. Subsections (2) and (5) of section 658.44,
6 Florida Statutes, are amended to read:
7 658.44 Approval by stockholders; rights of dissenters;
8 preemptive rights.--
9 (2) Written notice of the meeting of, or proposed
10 written consent action by, the stockholders of each
11 constituent state bank or state trust company shall be given
12 to each stockholder of record, whether or not entitled to
13 vote, and whether the meeting is an annual or a special
14 meeting or whether the vote is to be by written consent
15 pursuant to s. 607.0704, and the notice shall state that the
16 purpose or one of the purposes of the meeting, or of the
17 proposed action by the stockholders without a meeting, is to
18 consider the proposed plan of merger and merger agreement.
19 Except to the extent provided otherwise with respect to
20 stockholders of a resulting bank or trust company pursuant to
21 subsection (7), the notice shall also state that dissenting
22 stockholders, including those not entitled to vote but
23 dissenting as set forth in paragraph (c), will be entitled to
24 payment in cash of the value of only those shares held by the
25 stockholders:
26 (a) Which at a meeting of the stockholders are voted
27 against the approval of the plan of merger and merger
28 agreement;
29 (b) As to which, if the proposed action is to be by
30 written consent of stockholders pursuant to s. 607.0704, such
31 written consent is not given by the holder thereof; or
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1 (c) With respect to which the holder thereof has given
2 written notice to the constituent state bank or trust company,
3 at or prior to the meeting of the stockholders or on or prior
4 to the date specified for action by the stockholders without a
5 meeting pursuant to s. 607.0704 in the notice of such proposed
6 action, that the stockholder dissents from the plan of merger
7 and merger agreement, and which shares are not voted for
8 approval of the plan or written consent given under paragraph
9 (a) or paragraph (b).
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11 Hereinafter in this section, the term "dissenting shares"
12 means and includes only those shares, which may be all or less
13 than all the shares of any class owned by a stockholder,
14 described in paragraphs (a), (b), and (c).
15 (5) The fair value, as defined in s. 607.1301(4), of
16 dissenting shares of each constituent state bank or state
17 trust company, the owners of which have not accepted an offer
18 for such shares made pursuant to subsection (3), shall be
19 determined as of the effective date of the merger under ss.
20 607.1326-607.1331, except as the procedures for notice and
21 demand are otherwise provided in this section. by three
22 appraisers, one to be selected by the owners of at least
23 two-thirds of such dissenting shares, one to be selected by
24 the board of directors of the resulting state bank, and the
25 third to be selected by the two so chosen. The value agreed
26 upon by any two of the appraisers shall control and be final
27 and binding on all parties. If, within 90 days from the
28 effective date of the merger, for any reason one or more of
29 the appraisers is not selected as herein provided, or the
30 appraisers fail to determine the value of such dissenting
31 shares, the office shall cause an appraisal of such dissenting
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1 shares to be made which will be final and binding on all
2 parties. The expenses of appraisal shall be paid by the
3 resulting state bank or trust company.
4 Section 16. This act shall take effect October 1,
5 2007.
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7 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
8 Senate Bill 2084
9
10 The committee substitute provides the following changes:
11 1. Authorizes the sale of optional guaranteed asset
protection (GAP) products by motor vehicle installment
12 sellers, sales finance companies, retail lessors and
their assignees.
13
2. Increases the maximum delinquency charge from $10 to $25
14 for a default payment pursuant to a revolving account
provision in a retail installment contract.
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3. Specifies that a deposit or account made in the name of
16 two persons who are husband and wife is considered a
tenancy by the entirety unless otherwise specified in
17 writing.
18 4. Increases the minimum proposed capitalization for a
proposed bank or trust company from $6 million to $8
19 million.
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