CS/CS/HB 343

1
A bill to be entitled
2An act relating to financial services; amending s. 520.02,
3F.S.; defining the term "guaranteed asset protection
4product"; amending s. 520.07, F.S.; authorizing certain
5entities to offer optional guaranteed asset protection
6products under certain circumstances; prohibiting such
7entities from requiring purchase of such products as a
8condition for certain financial transactions; providing
9requirements for offering such products; providing
10limitations; amending s. 624.605, F.S.; including debt
11cancellation products under casualty insurance; providing
12a definition; authorizing certain entities to offer debt
13cancellation products under certain circumstances;
14specifying such products as not constituting insurance;
15amending ss. 627.553 and 627.679, F.S.; revising
16limitations on the amount of authorized insurance for
17debtors; amending s. 627.681, F.S.; revising a limitation
18on the term of credit disability insurance; amending s.
19655.005, F.S.; revising and providing definitions;
20amending s. 655.79, F.S.; specifying certain accounts as
21tenancies by the entireties; creating s. 655.967, F.S.;
22authorizing a state-mandated endowment to be maintained in
23trust accounts in financial institutions; 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; specifying that periodic payment options are not
30required to be offered for certain debt cancellation
31products; amending s. 655.954, F.S.; authorizing certain
32institutions to offer optional debt cancellation products
33with certain financial transactions; prohibiting requiring
34such products as a condition of such transactions;
35updating definitions; amending s. 658.21, F.S.; revising
36ownership requirements for capital accounts at opening for
37a bank or trust company; providing capital investment
38requirements for owners of certain holding companies;
39amending s. 658.34, F.S.; revising requirements for shares
40of capital stock of banks and trust companies; providing
41restrictions on issuance or sale of certain stock under
42certain circumstances; amending s. 658.36, F.S.; requiring
43a state bank or trust company to file a written notice
44before increasing its capital stock; amending s. 658.44,
45F.S.; revising certain notice requirements relating to
46dissenting stockholders; revising criteria for determining
47the value of dissenting shares of certain entities;
48providing an effective date.
49
50Be It Enacted by the Legislature of the State of Florida:
51
52     Section 1.  Subsections (7) through (19) of section 520.02,
53Florida Statutes, are renumbered as subsections (8) through
54(20), respectively, and new subsection (7) is added to that
55section to read:
56     520.02  Definitions.--In this act, unless the context or
57subject matter otherwise requires:
58     (7)  "Guaranteed asset protection product" means a loan,
59lease, or retail installment contract term, or modification or
60addendum to a loan, lease, or retail installment contract, under
61which a creditor agrees to waive a customer's liability for
62payment of some or all of the amount by which the debt exceeds
63the value of the collateral. Such a product is not insurance for
64purposes of the Florida Insurance Code. This subsection also
65applies to all guaranteed asset protection products issued
66before October 1, 2008.
67     Section 2.  Subsection (11) is added to section 520.07,
68Florida Statutes, to read:
69     520.07  Requirements and prohibitions as to retail
70installment contracts.--
71     (11)  In conjunction with entering into any new retail
72installment contract or contract for a loan, a motor vehicle
73retail installment seller as defined in s. 520.02, a sales
74finance company as defined in s. 520.02, or a retail lessor as
75defined in s. 521.003, and any assignee of such an entity, may
76offer, for a fee or otherwise, optional guaranteed asset
77protection products in accordance with this chapter. The motor
78vehicle retail installment seller, sales finance company, retail
79lessor, or assignee may not require the purchase of a guaranteed
80asset protection product as a condition for making the loan. In
81order to offer any guaranteed asset protection product, a motor
82vehicle retail installment seller, sales finance company, or
83retail lessor, and any assignee of such an entity, shall comply
84with the following:
85     (a)  The cost of any guaranteed asset protection product,
86with respect to any loan covered by the guaranteed asset
87protection product, shall not exceed the amount of the
88indebtedness.
89     (b)  Any contract or agreement pertaining to a guaranteed
90asset protection product shall be governed by this section.
91     (c)  A guaranteed asset protection product is considered an
92obligation of any person that purchases or otherwise acquires
93the loan contract covering such product.
94     (d)  An entity providing guaranteed asset protection
95products shall provide readily understandable disclosures that
96explain in detail eligibility requirements, conditions, refunds,
97and exclusions. The disclosures must provide that the purchase
98of the product is optional. The disclosures must be in plain
99language and of a typeface and size that are easy to read.
100     (e)  An entity must provide a copy of the executed
101guaranteed asset protection product contract to the buyer. The
102entity bears the burden of proving the contract was provided to
103the buyer.
104     (f)  An entity may not offer a contract for a guaranteed
105asset protection products that contains terms giving the entity
106the right to unilaterally modify the contract unless:
107     1.  The modification is favorable to the buyer and is made
108without additional charge to the buyer; or
109     2.  The buyer is notified of any proposed change and is
110provided a reasonable opportunity to cancel the contract without
111penalty before the change goes in effect.
112     (g)  If a contract for a guaranteed asset protection
113product is terminated, the entity shall refund to the buyer any
114unearned fees paid for the contract unless the contract provides
115otherwise. A refund is not due to a consumer who receives a
116benefit under such product. In order to receive a refund, the
117buyer must notify the entity of the event terminating the
118contract and request a refund within 90 days after the
119occurrence of the event terminating the contract. An entity may
120offer a buyer a contract that does not provide for a refund only
121if the entity also offers that buyer a bona fide option to
122purchase a comparable contract that provides for a refund.
123     Section 3.  Paragraph (r) is added to subsection (1) of
124section 624.605, Florida Statutes, to read:
125     624.605  "Casualty insurance" defined.--
126     (1)  "Casualty insurance" includes:
127     (r)  Insurance for debt cancellation products.--Insurance
128that a creditor may purchase against the risk of financial loss
129from the use of debt cancellation products with consumer loans
130or leases or retail installment contracts.
131     1.  For purposes of this paragraph, the term "debt
132cancellation products" means loan, lease, or retail installment
133contract terms, or modifications to loan, lease, or retail
134installment contracts, under which a creditor agrees to cancel
135or suspend all or part of a customer's obligation to make
136payments upon the occurrence of specified events and includes,
137but is not limited to, debt cancellation contracts, debt
138suspension agreements, and guaranteed asset protection
139contracts. However, the term "debt cancellation products" does
140not include title insurance as defined in s. 624.608.
141     2.  Debt cancellation products may be offered by financial
142institutions, as defined in s. 655.005(1)(h), insured depository
143institutions as defined in 12 U.S.C. s. 1813(c), and
144subsidiaries of such institutions, as provided in the financial
145institution codes, or by other business entities as may be
146specifically authorized by law, and such products shall not
147constitute insurance for purposes of the Florida Insurance Code.
148     Section 4.  Subsection (3) of section 627.553, Florida
149Statutes, is amended to read:
150     627.553  Debtor groups.--The lives of a group of
151individuals may be insured under a policy issued to a creditor
152or its parent holding company, or to a trustee or trustees or
153agent designated by two or more creditors, which creditor,
154holding company, affiliate, trustee or trustees, or agent shall
155be deemed the policyholder, to insure debtors of the creditor or
156creditors, subject to the following requirements:
157     (3)  The amount of insurance on the life of any debtor
158shall at no time exceed the amount owed by the debtor her or him
159which is repayable in installments to the creditor or $50,000,
160whichever is less, except that loans not exceeding 1 year's
161duration shall not be subject to such limits. However, on such
162loans not exceeding 1 year's duration, the limit of coverage
163shall not exceed $50,000 with any one insurer.
164     Section 5.  Paragraph (b) of subsection (1) of section
165627.679, Florida Statutes, is amended to read:
166     627.679  Amount of insurance; disclosure.--
167     (1)
168     (b)  The total amount of credit life insurance on the life
169of any debtor with respect to any loan or loans covered in one
170or more insurance policies shall at no time exceed the amount of
171the indebtedness $50,000 with any one creditor, except that
172loans not exceeding 1 year's duration shall not be subject to
173such limits, and on such loans not exceeding 1 year's duration,
174the limits of coverage shall not exceed $50,000 with any one
175insurer.
176     Section 6.  Subsection (2) of section 627.681, Florida
177Statutes, is amended to read:
178     627.681  Term and evidence of insurance.--
179     (2)  The term of credit disability insurance on any debtor
180insured under this section shall not exceed the term of
181indebtedness 10 years, and for credit transactions that exceed
18260 months, coverage shall not exceed 60 monthly indemnities.
183     Section 7.  Paragraphs (g) and (h) of subsection (1) of
184section 655.005, Florida Statutes, are amended, and paragraph
185(t) is added to that subsection, to read:
186     655.005  Definitions.--
187     (1)  As used in the financial institutions codes, unless
188the context otherwise requires, the term:
189     (g)  "Federal financial institution" means a federally or
190nationally chartered or organized financial institution
191association, bank, savings bank, or credit union.
192     (h)  "Financial institution" means a state or federal
193savings or thrift association, bank, savings bank, trust
194company, international bank agency, international banking
195organization, international branch, international representative
196office, or international administrative office, or credit union,
197or an agreement corporation operating pursuant to s. 25 of the
198Federal Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act
199corporation organized pursuant to s. 25(a) of the Federal
200Reserve Act, 12 U.S.C. ss. 611 et seq.
201     (t)  "Debt cancellation products" means loan, lease, or
202retail installment contract terms, or modifications or addenda
203to loan, lease, or retail installment contracts, under which a
204creditor agrees to cancel or suspend all or part of a customer's
205obligation to make payments upon the occurrence of specified
206events and includes, but is not limited to, debt cancellation
207contracts, debt suspension agreements, and guaranteed asset
208protection contracts offered by financial institutions, insured
209depository institutions as defined in 12 U.S.C. s. 1813(c), and
210subsidiaries of such institutions. However, the term "debt
211cancellation products" does not include title insurance as
212defined in s. 624.608.
213     Section 8.  Subsection (1) of section 655.79, Florida
214Statutes, is amended to read:
215     655.79  Deposits and accounts in two or more names;
216presumption as to vesting on death.--
217     (1)  Unless otherwise expressly provided in a contract,
218agreement, or signature card executed in connection with the
219opening or maintenance of an account, including a certificate of
220deposit, a deposit account in the names of two or more persons
221shall be presumed to have been intended by such persons to
222provide that, upon the death of any one of them, all rights,
223title, interest, and claim in, to, and in respect of such
224deposit account, less all proper setoffs and charges in favor of
225the institution, vest in the surviving person or persons. Any
226deposit or account made in the name of two persons who are
227husband and wife shall be considered a tenancy by the entirety
228unless otherwise specified in writing.
229     Section 9.  Section 655.967, Florida Statutes, is created
230to read:
231     655.967  State-funded endowments.--A state-mandated
232endowment funded through a general appropriations act prior to
2331990 may be maintained in trust accounts in financial
234institutions as defined in s. 655.005.
235     Section 10.  Section 655.947, Florida Statutes, is created
236to read:
237     655.947  Debt cancellation products.--
238     (1)  Debt cancellation products may be offered, and a fee
239may be charged, by financial institutions and subsidiaries of
240financial institutions subject to the provisions of this section
241and the rules and orders of the commission or office. As used in
242this section, the term "financial institutions" includes those
243defined in s. 655.005(1)(h), insured depository institutions as
244defined in 12 U.S.C. s. 1813, and subsidiaries of such
245institutions.
246     (2)  A financial institution shall manage the risks
247associated with debt cancellation products in accordance with
248prudent safety and soundness principles. A financial institution
249shall establish and maintain effective risk management and
250control processes over its debt cancellation products and
251programs. Such processes shall include appropriate recognition
252and financial reporting of income, expenses, assets, and
253liabilities and appropriate treatment of all expected and
254unexpected losses associated with the products. Each financial
255institution shall also assess the adequacy of its internal
256control and risk mitigation activities in view of the nature and
257scope of its debt cancellation products and programs.
258     (3)  The commission shall adopt rules pursuant to ss.
259120.536(1) and 120.54 to administer this section, which rules
260must be consistent with 12 C.F.R. part 37, as amended.
261     (4)  For the purposes of this section and any rules adopted
262pursuant to this section, a periodic payment option is not
263required to be offered for any debt cancellation product
264designed to protect a customer against a deficiency between the
265outstanding loan or lease amount and the value of the motor
266vehicle that is used as collateral for the loan or lease.
267     Section 11.  Section 655.954, Florida Statutes, is amended
268to read:
269     655.954  Financial institution loans; credit cards.--
270     (1)  Notwithstanding any other provision of law, a
271financial institution shall have the power to make loans or
272extensions of credit to any person on a credit card or overdraft
273financing arrangement and to charge, in any billing cycle,
274interest on the outstanding amount at a rate that is specified
275in a written agreement, between the financial institution and
276borrower, governing the credit card account. Such credit card
277agreement may modify any terms or conditions of such credit card
278account upon prior written notice of such modification as
279specified by the terms of the agreement governing the credit
280card account or by the Truth in Lending Act, 15 U.S.C. ss. 1601
281et seq., as amended, and the rules and regulations adopted under
282such act. Any such notice provided by a financial institution
283shall specify that the borrower has the right to surrender the
284credit card whereupon the borrower shall have the right to
285continue to pay off the borrower's credit card account in the
286same manner and under the same terms and conditions as then in
287effect. The borrower's failure to surrender the credit card
288prior to the modifications becoming effective shall constitute a
289consent to the modifications.
290     (2)  In conjunction with entering into any contract or
291agreement for a loan, line of credit, or loan extension, a
292financial institution, insured depository institution as defined
293in 12 U.S.C. s. 1813, and subsidiaries of such institutions may
294offer, for a fee or otherwise, optional debt cancellation
295products pursuant to s. 655.947 and rules adopted under that
296section. The financial institution may not require the purchase
297of a debt cancellation product as a condition for making the
298loan, line of credit, or loan extension.
299     (3)(2)  For the purpose of this section, the term:
300     (a)  "Billing cycle" has the same meaning as ascribed to it
301under the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et
302seq., as amended, and the associated regulations which are in
303effect as of January 31, 2008 June 30, 1992.
304     (b)  "Interest" means those charges considered a finance
305charge under the federal Truth in Lending Act, 15 U.S.C. ss.
3061601 et seq., as amended, and the associated regulations which
307are in effect as of January 31, 2008 June 30, 1992.
308     Section 12.  Subsection (2) of section 658.21, Florida
309Statutes, is amended to read:
310     658.21  Approval of application; findings required.--The
311office shall approve the application if it finds that:
312     (2)  The proposed capitalization is in such amount as the
313office deems adequate, but in no case may the total capital
314accounts at opening for a bank be less than $8 $6 million if the
315proposed bank is to be located in any county which is included
316in a metropolitan statistical area, or $4 million if the
317proposed bank is to be located in any other county. The total
318capital accounts at opening for a trust company may not be less
319than $3 $2 million. The organizing directors of the proposed
320bank shall directly own or control at least the lesser of $3
321million or 25 percent of the bank's total capital accounts
322proposed at opening as approved by the office. When the proposed
323bank will be owned by a single-bank holding company, the
324organizing directors of the proposed bank collectively shall
325directly own or control at least an amount of the single-bank
326holding company's capital accounts equal to the lesser of $3
327million or 25 percent of the proposed bank's total capital
328accounts proposed at opening as approved by the office. When the
329proposed bank will be owned by an existing multi-bank holding
330company, the proposed directors shall have a substantial capital
331investment in the holding company, as determined by the office;
332however, such investment shall not be required to exceed the
333amount otherwise required for a single-bank holding company
334application. Of total capital accounts at opening, as noted in
335the application or amendments or changes to the application, at
336least 25 percent of the capital shall be directly owned or
337controlled by the organizing directors of the bank. Directors of
338banks owned by single-bank holding companies shall have direct
339ownership or control of at least 25 percent of the bank holding
340company's capital accounts. The office may disallow illegally
341obtained currency, monetary instruments, funds, or other
342financial resources from the capitalization requirements of this
343section. The proposed stock offering must comply with the
344requirements of ss. 658.23-658.25 and ss. 658.34-658.37.
345     Section 13.  Section 658.34, Florida Statutes, is amended
346to read:
347     658.34  Shares of capital stock.--
348     (1)  A bank or trust company shall issue its capital stock
349with par value of not more than $100 nor less than $1 per share.
350     (2)  No bank or trust company shall issue any shares of
351capital stock at a price less than par value, and prior to
352issuance, any such shares must be fully paid in cash.
353     (3)  With the approval of the office, a bank or trust
354company may issue preferred stock of one or more classes in an
355amount and with a par value as approved by the office.
356     (4)  With the approval of the office, a bank or trust
357company may issue less than all the number of shares of any of
358its capital stock authorized by its articles of incorporation.
359Such authorized but unissued shares may be issued only for the
360following purposes:
361     (a)  To provide for stock options and warrants as provided
362in s. 658.35.
363     (b)  To declare or pay a stock dividend; however, any such
364stock dividend must comply with the provisions of this section
365and s. 658.37.
366     (c)  To increase the capital of the bank or trust company,
367with the approval of the office.
368     (5)  Stock of the same class may not be issued or sold by
369the financial institution that creates different rights,
370options, warrants, or benefits among the purchasers or
371stockholders of that class of stock. Such prohibition does not
372restrict the financial institution from creating uniform
373restrictions on the transfer of stock as permitted in s.
374607.0627.
375     Section 14.  Subsection (2) of section 658.36, Florida
376Statutes, is amended to read:
377     658.36  Changes in capital.--
378     (2)  Any state bank or trust company may, with the approval
379of the office, provide for an increase in its capital stock
380after filing a written notice at least 15 days prior to making
381such increase.
382     Section 15.  Subsections (2) and (5) of section 658.44,
383Florida Statutes, are amended to read:
384     658.44  Approval by stockholders; rights of dissenters;
385preemptive rights.--
386     (2)  Written notice of the meeting of, or proposed written
387consent action by, the stockholders of each constituent state
388bank or state trust company shall be given to each stockholder
389of record, whether or not entitled to vote, and whether the
390meeting is an annual or a special meeting or whether the vote is
391to be by written consent pursuant to s. 607.0704, and the notice
392shall state that the purpose or one of the purposes of the
393meeting, or of the proposed action by the stockholders without a
394meeting, is to consider the proposed plan of merger and merger
395agreement. Except to the extent provided otherwise with respect
396to stockholders of a resulting bank or trust company pursuant to
397subsection (7), the notice shall also state that dissenting
398stockholders, including stockholders not entitled to vote but
399dissenting under paragraph (c), will be entitled to payment in
400cash of the value of only those shares held by the stockholders:
401     (a)  Which at a meeting of the stockholders are voted
402against the approval of the plan of merger and merger agreement;
403     (b)  As to which, if the proposed action is to be by
404written consent of stockholders pursuant to s. 607.0704, such
405written consent is not given by the holder thereof; or
406     (c)  With respect to which the holder thereof has given
407written notice to the constituent state bank or trust company,
408at or prior to the meeting of the stockholders or on or prior to
409the date specified for action by the stockholders without a
410meeting pursuant to s. 607.0704 in the notice of such proposed
411action, that the stockholder dissents from the plan of merger
412and merger agreement, and which shares are not voted for
413approval of the plan or written consent given pursuant to
414paragraph (a) or paragraph (b).
415
416Hereinafter in this section, the term "dissenting shares" means
417and includes only those shares, which may be all or less than
418all the shares of any class owned by a stockholder, described in
419paragraphs (a), (b), and (c).
420     (5)  The fair value, as defined in s. 607.1301(4), of
421dissenting shares of each constituent state bank or state trust
422company, the owners of which have not accepted an offer for such
423shares made pursuant to subsection (3), shall be determined
424pursuant to ss. 607.1326-607.1331 except as the procedures for
425notice and demand are otherwise provided in this section as of
426the effective date of the merger by three appraisers, one to be
427selected by the owners of at least two-thirds of such dissenting
428shares, one to be selected by the board of directors of the
429resulting state bank, and the third to be selected by the two so
430chosen. The value agreed upon by any two of the appraisers shall
431control and be final and binding on all parties. If, within 90
432days from the effective date of the merger, for any reason one
433or more of the appraisers is not selected as herein provided, or
434the appraisers fail to determine the value of such dissenting
435shares, the office shall cause an appraisal of such dissenting
436shares to be made which will be final and binding on all
437parties. The expenses of appraisal shall be paid by the
438resulting state bank or trust company.
439     Section 16.  This act shall take effect October 1, 2008.


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