HB 7087

1
A bill to be entitled
2An act relating to financial services; amending s. 520.02,
3F.S.; defining the term "debt cancellation product";
4amending s. 520.07, F.S.; authorizing certain entities to
5offer optional debt cancellation products under certain
6circumstances; prohibiting such entities from requiring
7purchase of such products as a condition for certain
8financial transactions; providing requirements for
9offering such products; authorizing the Financial Services
10Commission to adopt rules; providing limitations; amending
11s. 520.35, F.S.; revising a fee relating to certain
12revolving accounts; amending s. 624.605, F.S.; including
13debt cancellation products under casualty insurance;
14providing a definition; authorizing certain entities to
15offer debt cancellation products under certain
16circumstances; specifying such products as not
17constituting insurance; amending ss. 627.553 and 627.679,
18F.S.; revising limitations on the amount of authorized
19insurance for debtors; amending s. 627.681, F.S.; revising
20a limitation on the term of credit disability insurance;
21amending s. 655.005, F.S.; revising and providing
22definitions; amending s. 655.79, F.S.; specifying certain
23accounts as tenancies by the entireties; creating s.
24655.947, F.S.; authorizing financial institutions to offer
25debt cancellation products; authorizing a fee; providing a
26definition; providing requirements for financial
27institutions relating to debt cancellation products;
28requiring the Financial Services Commission to adopt
29rules; amending s. 655.954, F.S.; authorizing certain
30institutions to offer optional debt cancellation products
31with certain financial transactions; prohibiting requiring
32such products as a condition of such transactions;
33updating definitions; amending s. 658.21, F.S.; revising
34ownership requirements for capital accounts at opening for
35a bank or trust company; providing capital investment
36requirements for owners of certain holding companies;
37amending s. 658.34, F.S.; revising requirements for shares
38of capital stock of banks and trust companies; providing
39restrictions on issuance or sale of certain stock under
40certain circumstances; amending s. 658.36, F.S.; requiring
41a state bank or trust company to file a written notice
42before increasing its capital stock; amending s. 658.44,
43F.S.; revising certain notice requirements relating to
44dissenting stockholders; revising criteria for determining
45the value of dissenting shares of certain entities;
46providing an effective date.
47
48Be It Enacted by the Legislature of the State of Florida:
49
50     Section 1.  Subsections (5) through (19) of section 520.02,
51Florida Statutes, are renumbered as subsections (6) through
52(20), respectively, and new subsection (5) is added to that
53section to read:
54     520.02  Definitions.--In this act, unless the context or
55subject matter otherwise requires:
56     (5)  "Debt cancellation product" means a loan, lease, or
57retail installment contract term, or modification or addendum to
58a loan, lease, or retail installment contract, under which a
59creditor agrees to cancel or suspend all or part of a customer's
60obligation to make payments upon the occurrence of specified
61events and includes, but is not limited to, debt cancellation
62contracts, debt suspension agreements, and guaranteed asset
63protection.
64     Section 2.  Subsection (11) is added to section 520.07,
65Florida Statutes, to read:
66     520.07  Requirements and prohibitions as to retail
67installment contracts.--
68     (11)  In conjunction with entering into any new retail
69installment contract or contract for a loan, a motor vehicle
70retail installment seller as defined in s. 520.02, sales finance
71company as defined in s. 520.02, or retail lessor as defined in
72s. 521.003, and any assignee of such entities, may offer, for a
73fee or otherwise, optional debt cancellation products in
74accordance with this chapter and the rules adopted by the
75commission. The motor vehicle retail installment seller, sales
76finance company, retail lessor, or assignee may not require the
77purchase of a debt cancellation product as a condition for
78making the loan.
79     (a)  In order to offer any debt cancellation product, a
80motor vehicle retail installment seller, sales finance company,
81or retail lessor, and any assignee of such entities, shall
82comply with the following:
83     1.  The cost of any debt cancellation product, with respect
84to any loan covered by the debt cancellation product, shall not
85exceed the amount of the indebtedness.
86     2.  Any contract or agreement pertaining to a debt
87cancellation product shall be governed by this section.
88     3.  A debt cancellation product is considered an obligation
89of any person that purchases or otherwise acquires the loan
90contract covering such product.
91     (b)  The commission shall adopt rules pursuant to ss.
92120.536(1) and 120.54 to administer this subsection. The rules
93shall be limited to prohibited practices and prohibited contract
94terms, disclosure and refund requirements, and payment of fees.
95     Section 3.  Subsection (3) of section 520.35, Florida
96Statutes, is amended to read:
97     520.35  Revolving accounts.--
98     (3)  Notwithstanding the provisions of any other law, the
99seller under a revolving account may charge, receive, and
100collect a finance charge which may not exceed 15 cents per $10
101per month, computed on all amounts unpaid under the revolving
102account from month to month (which need not be a calendar month)
103or other regular period, and a delinquency charge not to exceed
104$25 $10 for each payment in default for a period of not less
105than 10 days, if the charge is agreed upon, in writing, between
106the parties before imposing any charge. If the amount of the
107finance charge so computed is less than $1 for any such month, a
108finance charge of $1 for any such month may be charged,
109received, and collected. If the regular period is other than
110such monthly period or if the unpaid amount is less than or
111greater than $5, the permitted finance charge shall be computed
112proportionately. Such finance charge may be computed for all
113unpaid balances within a range of not in excess of $10 on the
114basis of the median amount within such range, if as so computed
115such finance charge is applied to all unpaid balances within
116such range.
117     Section 4.  Paragraph (r) is added to subsection (1) of
118section 624.605, Florida Statutes, to read:
119     624.605  "Casualty insurance" defined.--
120     (1)  "Casualty insurance" includes:
121     (r)  Insurance for debt cancellation products.--Insurance
122that a creditor may purchase against the risk of financial loss
123from the use of debt cancellation products with consumer loans
124or leases or retail installment contracts.
125     1.  For purposes of this paragraph, the term "debt
126cancellation products" means loan, lease, or retail installment
127contract terms, or modifications to loan, lease, or retail
128installment contracts, under which a creditor agrees to cancel
129or suspend all or part of a customer's obligation to make
130payments upon the occurrence of specified events and includes,
131but is not limited to, debt cancellation contracts, debt
132suspension agreements, and guaranteed asset protection
133contracts.
134     2.  Debt cancellation products may be offered by financial
135institutions, as defined in s. 655.005(1)(h), including insured
136depository institutions as defined in 12 U.S.C. s. 1813(c) and
137subsidiaries of such institutions, as provided in the financial
138institution codes, or by other business entities as may be
139specifically authorized by law, and such products shall not
140constitute insurance for purposes of the Florida Insurance Code.
141     Section 5.  Subsection (3) of section 627.553, Florida
142Statutes, is amended to read:
143     627.553  Debtor groups.--The lives of a group of
144individuals may be insured under a policy issued to a creditor
145or its parent holding company, or to a trustee or trustees or
146agent designated by two or more creditors, which creditor,
147holding company, affiliate, trustee or trustees, or agent shall
148be deemed the policyholder, to insure debtors of the creditor or
149creditors, subject to the following requirements:
150     (3)  The amount of insurance on the life of any debtor
151shall at no time exceed the amount owed by the debtor her or him
152which is repayable in installments to the creditor or $50,000,
153whichever is less, except that loans not exceeding 1 year's
154duration shall not be subject to such limits. However, on such
155loans not exceeding 1 year's duration, the limit of coverage
156shall not exceed $50,000 with any one insurer.
157     Section 6.  Paragraph (b) of subsection (1) of section
158627.679, Florida Statutes, is amended to read:
159     627.679  Amount of insurance; disclosure.--
160     (1)
161     (b)  The total amount of credit life insurance on the life
162of any debtor with respect to any loan or loans covered in one
163or more insurance policies shall at no time exceed the amount of
164the indebtedness $50,000 with any one creditor, except that
165loans not exceeding 1 year's duration shall not be subject to
166such limits, and on such loans not exceeding 1 year's duration,
167the limits of coverage shall not exceed $50,000 with any one
168insurer.
169     Section 7.  Subsection (2) of section 627.681, Florida
170Statutes, is amended to read:
171     627.681  Term and evidence of insurance.--
172     (2)  The term of credit disability insurance on any debtor
173insured under this section shall not exceed the term of
174indebtedness 10 years, and for credit transactions that exceed
17560 months, coverage shall not exceed 60 monthly indemnities.
176     Section 8.  Paragraphs (g) and (h) of subsection (1) of
177section 655.005, Florida Statutes, are amended, and paragraph
178(t) is added to that subsection, to read:
179     655.005  Definitions.--
180     (1)  As used in the financial institutions codes, unless
181the context otherwise requires, the term:
182     (g)  "Federal financial institution" means a federally or
183nationally chartered or organized financial institution
184association, bank, savings bank, or credit union.
185     (h)  "Financial institution" means a state or federal
186savings or thrift association, bank, savings bank, trust
187company, international bank agency, international banking
188organization, international branch, international representative
189office, or international administrative office, or credit union,
190or an agreement corporation operating pursuant to s. 25 of the
191Federal Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act
192corporation organized pursuant to s. 25(a) of the Federal
193Reserve Act, 12 U.S.C. ss. 611 et seq.
194     (t)  "Debt cancellation products" means loan, lease, or
195retail installment contract terms, or modifications to loan,
196lease, or retail installment contracts, under which a creditor
197agrees to cancel or suspend all or part of a customer's
198obligation to make payments upon the occurrence of specified
199events and includes, but is not limited to, debt cancellation
200contracts, debt suspension agreements, and guaranteed asset
201protection contracts offered by financial institutions, insured
202depository institutions as defined in 12 U.S.C. s. 1813(c), and
203subsidiaries of such institutions.
204     Section 9.  Subsection (1) of section 655.79, Florida
205Statutes, is amended to read:
206     655.79  Deposits and accounts in two or more names;
207presumption as to vesting on death.--
208     (1)  Unless otherwise expressly provided in a contract,
209agreement, or signature card executed in connection with the
210opening or maintenance of an account, including a certificate of
211deposit, a deposit account in the names of two or more persons
212shall be presumed to have been intended by such persons to
213provide that, upon the death of any one of them, all rights,
214title, interest, and claim in, to, and in respect of such
215deposit account, less all proper setoffs and charges in favor of
216the institution, vest in the surviving person or persons. Any
217deposit or account made in the name of two persons who are
218husband and wife shall be considered a tenancy by the entirety
219unless otherwise specified in writing.
220     Section 10.  Section 655.947, Florida Statutes, is created
221to read:
222     655.947  Debt cancellation products.--
223     (1)  Debt cancellation products may be offered, and a fee
224may be charged, by financial institutions and subsidiaries of
225financial institutions subject to the provisions of this section
226and the rules and orders of the commission or office. As used in
227this section, the term "financial institutions" includes those
228defined in s. 655.005(1)(h), insured depository institutions as
229defined in 12 U.S.C. s. 1813, and subsidiaries of such
230institutions.
231     (2)  A financial institution shall manage the risks
232associated with debt cancellation products in accordance with
233prudent safety and soundness principles. A financial institution
234shall establish and maintain effective risk management and
235control processes over its debt cancellation products and
236programs. Such processes shall include appropriate recognition
237and financial reporting of income, expenses, assets, and
238liabilities and appropriate treatment of all expected and
239unexpected losses associated with the products. Each financial
240institution shall also assess the adequacy of its internal
241control and risk mitigation activities in view of the nature and
242scope of its debt cancellation products and programs.
243     (3)  The commission shall adopt rules pursuant to ss.
244120.536(1) and 120.54 to administer this section, which rules
245must be consistent with 12 C.F.R. part 37, as amended.
246     Section 11.  Section 655.954, Florida Statutes, is amended
247to read:
248     655.954  Financial institution loans; credit cards.--
249     (1)  Notwithstanding any other provision of law, a
250financial institution shall have the power to make loans or
251extensions of credit to any person on a credit card or overdraft
252financing arrangement and to charge, in any billing cycle,
253interest on the outstanding amount at a rate that is specified
254in a written agreement, between the financial institution and
255borrower, governing the credit card account. Such credit card
256agreement may modify any terms or conditions of such credit card
257account upon prior written notice of such modification as
258specified by the terms of the agreement governing the credit
259card account or by the Truth in Lending Act, 15 U.S.C. ss. 1601
260et seq., as amended, and the rules and regulations adopted under
261such act. Any such notice provided by a financial institution
262shall specify that the borrower has the right to surrender the
263credit card whereupon the borrower shall have the right to
264continue to pay off the borrower's credit card account in the
265same manner and under the same terms and conditions as then in
266effect. The borrower's failure to surrender the credit card
267prior to the modifications becoming effective shall constitute a
268consent to the modifications.
269     (2)  In conjunction with entering into any contract or
270agreement for a loan, line of credit, or loan extension, a
271financial institution, insured depository institution as defined
272in 12 U.S.C. s. 1813, and subsidiaries of such institutions may
273offer, for a fee or otherwise, optional debt cancellation
274products pursuant to s. 655.947 and rules adopted under that
275section. The financial institution may not require the purchase
276of a debt cancellation product as a condition for making the
277loan, line of credit, or loan extension.
278     (3)(2)  For the purpose of this section, the term:
279     (a)  "Billing cycle" has the same meaning as ascribed to it
280under the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et
281seq., as amended, and the associated regulations which are in
282effect as of June 30, 2007 1992.
283     (b)  "Interest" means those charges considered a finance
284charge under the federal Truth in Lending Act, 15 U.S.C. ss.
2851601 et seq., as amended, and the associated regulations which
286are in effect as of June 30, 2007 1992.
287     Section 12.  Subsection (2) of section 658.21, Florida
288Statutes, is amended to read:
289     658.21  Approval of application; findings required.--The
290office shall approve the application if it finds that:
291     (2)  The proposed capitalization is in such amount as the
292office deems adequate, but in no case may the total capital
293accounts at opening for a bank be less than $8 $6 million if the
294proposed bank is to be located in any county which is included
295in a metropolitan statistical area, or $4 million if the
296proposed bank is to be located in any other county. The total
297capital accounts at opening for a trust company may not be less
298than $3 $2 million. The organizing directors of the proposed
299bank shall directly own or control at least the lesser of $3
300million or 25 percent of the bank's total capital accounts
301proposed at opening as approved by the office. When the proposed
302bank will be owned by a single-bank holding company, the
303organizing directors of the proposed bank collectively shall
304directly own or control at least an amount of the single-bank
305holding company's capital accounts equal to the lesser of $3
306million or 25 percent of the proposed bank's total capital
307accounts proposed at opening as approved by the office. When the
308proposed bank will be owned by an existing multi-bank holding
309company, the proposed directors shall have a substantial capital
310investment in the holding company, as determined by the office;
311however, such investment shall not be required to exceed the
312amount otherwise required for a single-bank holding company
313application. Of total capital accounts at opening, as noted in
314the application or amendments or changes to the application, at
315least 25 percent of the capital shall be directly owned or
316controlled by the organizing directors of the bank. Directors of
317banks owned by single-bank holding companies shall have direct
318ownership or control of at least 25 percent of the bank holding
319company's capital accounts. The office may disallow illegally
320obtained currency, monetary instruments, funds, or other
321financial resources from the capitalization requirements of this
322section. The proposed stock offering must comply with the
323requirements of ss. 658.23-659.25 and ss. 658.34-658.37.
324     Section 13.  Section 658.34, Florida Statutes, is amended
325to read:
326     658.34  Shares of capital stock.--
327     (1)  A bank or trust company shall issue its capital stock
328with par value of not more than $100 nor less than $1 per share.
329     (2)  No bank or trust company shall issue any shares of
330capital stock at a price less than par value, and prior to
331issuance, any such shares must be fully paid in cash.
332     (3)  With the approval of the office, a bank or trust
333company may issue preferred stock of one or more classes in an
334amount and with a par value as approved by the office.
335     (4)  With the approval of the office, a bank or trust
336company may issue less than all the number of shares of any of
337its capital stock authorized by its articles of incorporation.
338Such authorized but unissued shares may be issued only for the
339following purposes:
340     (a)  To provide for stock options and warrants as provided
341in s. 658.35.
342     (b)  To declare or pay a stock dividend; however, any such
343stock dividend must comply with the provisions of this section
344and s. 658.37.
345     (c)  To increase the capital of the bank or trust company,
346with the approval of the office.
347     (5)  Stock of the same class may not be issued or sold by
348the financial institution that creates different rights,
349options, warrants, or benefits among the purchasers or
350stockholders of that class of stock. Such prohibition does not
351restrict the financial institution from creating uniform
352restrictions on the transfer of stock as permitted in s.
353607.0627.
354     Section 14.  Subsection (2) of section 658.36, Florida
355Statutes, is amended to read:
356     658.36  Changes in capital.--
357     (2)  Any state bank or trust company may, with the approval
358of the office, provide for an increase in its capital stock
359after filing a written notice at least 15 days prior to making
360such increase.
361     Section 15.  Subsections (2) and (5) of section 658.44,
362Florida Statutes, are amended to read:
363     658.44  Approval by stockholders; rights of dissenters;
364preemptive rights.--
365     (2)  Written notice of the meeting of, or proposed written
366consent action by, the stockholders of each constituent state
367bank or state trust company shall be given to each stockholder
368of record, whether or not entitled to vote, and whether the
369meeting is an annual or a special meeting or whether the vote is
370to be by written consent pursuant to s. 607.0704, and the notice
371shall state that the purpose or one of the purposes of the
372meeting, or of the proposed action by the stockholders without a
373meeting, is to consider the proposed plan of merger and merger
374agreement. Except to the extent provided otherwise with respect
375to stockholders of a resulting bank or trust company pursuant to
376subsection (7), the notice shall also state that dissenting
377stockholders, including stockholders not entitled to vote but
378dissenting under paragraph (c), will be entitled to payment in
379cash of the value of only those shares held by the stockholders:
380     (a)  Which at a meeting of the stockholders are voted
381against the approval of the plan of merger and merger agreement;
382     (b)  As to which, if the proposed action is to be by
383written consent of stockholders pursuant to s. 607.0704, such
384written consent is not given by the holder thereof; or
385     (c)  With respect to which the holder thereof has given
386written notice to the constituent state bank or trust company,
387at or prior to the meeting of the stockholders or on or prior to
388the date specified for action by the stockholders without a
389meeting pursuant to s. 607.0704 in the notice of such proposed
390action, that the stockholder dissents from the plan of merger
391and merger agreement, and which shares are not voted for
392approval of the plan or written consent given pursuant to
393paragraph (a) or paragraph (b).
394
395Hereinafter in this section, the term "dissenting shares" means
396and includes only those shares, which may be all or less than
397all the shares of any class owned by a stockholder, described in
398paragraphs (a), (b), and (c).
399     (5)  The fair value, as defined in s. 607.1301(4), of
400dissenting shares of each constituent state bank or state trust
401company, the owners of which have not accepted an offer for such
402shares made pursuant to subsection (3), shall be determined
403pursuant to ss. 607.1326 and 607.1331 except as the procedures
404for notice and demand are otherwise provided in this section as
405of the effective date of the merger by three appraisers, one to
406be selected by the owners of at least two-thirds of such
407dissenting shares, one to be selected by the board of directors
408of the resulting state bank, and the third to be selected by the
409two so chosen. The value agreed upon by any two of the
410appraisers shall control and be final and binding on all
411parties. If, within 90 days from the effective date of the
412merger, for any reason one or more of the appraisers is not
413selected as herein provided, or the appraisers fail to determine
414the value of such dissenting shares, the office shall cause an
415appraisal of such dissenting shares to be made which will be
416final and binding on all parties. The expenses of appraisal
417shall be paid by the resulting state bank or trust company.
418     Section 16.  This act shall take effect October 1, 2007.


CODING: Words stricken are deletions; words underlined are additions.