1

A bill to be entitled

2

An act relating to financial services; amending s. 20.121,

3

F.S.; providing that the appointment of the director of

4

each office within the Department of Financial Services is

5

subject biennially to reaffirmation, which may be

6

accomplished by a simple majority vote of the Financial

7

Services Commission; requiring that such vote occur by a

8

specified date; amending s. 520.02, F.S.; defining the

9

term "guaranteed asset protection products"; amending s.

10

520.07, F.S.; setting forth requirements and prohibitions

11

for selling guaranteed asset protection products; amending

12

s. 624.605, F.S.; including debt-cancellation products

13

under casualty insurance; providing a definition;

14

authorizing certain entities to offer debt-cancellation

15

products under certain circumstances; specifying that such

16

products are not insurance; amending ss. 627.553 and

17

627.679, F.S.; revising limitations on the amount of

18

authorized insurance for debtors; amending s. 627.681,

19

F.S.; revising a limitation on the term of credit

20

disability insurance; amending s. 655.005, F.S.;

21

redefining the terms "federal financial institution" and

22

"financial institution"; defining the term "debt-

23

cancellation products"; amending s. 655.79, F.S.;

24

providing that a deposit account by a husband and wife is

25

a tenancy by the entirety; creating s. 655.947, F.S.;

26

providing a definition; authorizing financial institutions

27

to offer debt-cancellation products; authorizing a fee;

28

requiring the Financial Services Commission to adopt

29

rules; providing that a periodic payment option is not

30

required for certain debt-cancellation products; amending

31

s. 655.954, F.S.; authorizing a financial institution to

32

offer a debt-cancellation product but not as a requirement

33

of receiving a loan; creating s. 655.967, F.S.; providing

34

that state-mandated endowments may be maintained in trust

35

accounts in financial institutions; amending s. 658.21,

36

F.S.; revising an ownership of capital criterion for

37

capital accounts at financial institutions and one-bank

38

holding companies; amending s. 658.34, F.S.; prohibiting

39

certain stock issuance practices for banks; amending s.

40

658.36, F.S.; requiring a state bank or trust company to

41

file a written notice before increasing its capital stock;

42

amending s. 658.44, F.S.; revising criteria for

43

determining the value of dissenting shares of certain

44

entities; providing an effective date.

45

46

Be It Enacted by the Legislature of the State of Florida:

47

48

     Section 1.  Paragraph (d) of subsection (3) of section

49

20.121, Florida Statutes, is amended to read:

50

     20.121  Department of Financial Services.--There is created

51

a Department of Financial Services.

52

     (3)  FINANCIAL SERVICES COMMISSION.--Effective January 7,

53

2003, there is created within the Department of Financial

54

Services the Financial Services Commission, composed of the

55

Governor, the Attorney General, the Chief Financial Officer, and

56

the Commissioner of Agriculture, which shall for purposes of this

57

section be referred to as the commission. Commission members

58

shall serve as agency head of the Financial Services Commission.

59

The commission shall be a separate budget entity and shall be

60

exempt from the provisions of s. 20.052. Commission action shall

61

be by majority vote consisting of at least three affirmative

62

votes. The commission shall not be subject to control,

63

supervision, or direction by the Department of Financial Services

64

in any manner, including purchasing, transactions involving real

65

or personal property, personnel, or budgetary matters.

66

     (d) Appointment and qualifications of directors.--Except as

67

otherwise provided with respect to the reaffirmation of

68

appointments, the commission shall appoint or remove each

69

director by a majority vote consisting of at least three

70

affirmative votes, with both the Governor and the Chief Financial

71

Officer on the prevailing side. The minimum qualifications of the

72

directors are as follows:

73

     1.  Prior to appointment as director, the Director of the

74

Office of Insurance Regulation must have had, within the previous

75

10 years, at least 5 years of responsible private sector

76

experience working full time in areas within the scope of the

77

subject matter jurisdiction of the Office of Insurance Regulation

78

or at least 5 years of experience as a senior examiner or other

79

senior employee of a state or federal agency having regulatory

80

responsibility over insurers or insurance agencies.

81

     2.  Prior to appointment as director, the Director of the

82

Office of Financial Regulation must have had, within the previous

83

10 years, at least 5 years of responsible private sector

84

experience working full time in areas within the subject matter

85

jurisdiction of the Office of Financial Regulation or at least 5

86

years of experience as a senior examiner or other senior employee

87

of a state or federal agency having regulatory responsibility

88

over financial institutions, finance companies, or securities

89

companies.

90

91

The appointment of each director is subject to a vote of

92

reaffirmation on a biennial basis, which shall be by a simple

93

majority vote of the commission.

94

     Section 2. The vote of reaffirmation required in paragraph

95

(d) of subsection (3) of s. 20.121, Florida Statutes shall occur

96

by October 1, 2008.

97

     Section 3.  Present subsections (7) through (19) of section

98

520.02, Florida Statutes, are redesignated as subsections (8)

99

through (20), respectively, and a new subsection (7) is added to

100

that section, to read:

101

     520.02  Definitions.--In this act, unless the context or

102

subject matter otherwise requires:

103

     (7) "Guaranteed asset protection products" means loan,

104

lease, or retail installment contract terms, or modifications or

105

addenda to loan, lease, or retail installment contracts, under

106

which a creditor agrees to waive a customer's liability for

107

payment of some or all of the amount by which the debt exceeds

108

the value of the collateral. This product is not insurance for

109

purposes of the Florida Insurance Code. This subsection also

110

applies to all such guaranteed asset protection products issued

111

before October 1, 2008.

112

     Section 4.  Subsection (11) is added to section 520.07,

113

Florida Statutes, to read:

114

     520.07  Requirements and prohibitions as to retail

115

installment contracts.--

116

     (11) In conjunction with entering into a new retail

117

installment contract or contract for a loan, a motor vehicle

118

retail installment seller, as defined in s. 520.02(10), sales

119

finance company, as defined in s. 520.02(18), or retail lessors,

120

as defined in s. 521.003(8), and their assignees may offer, for a

121

fee or otherwise, optional guaranteed asset protection products

122

in accordance with this chapter. The motor vehicle retail

123

installment seller, sales finance company, or retail lessor may

124

not require the purchase of a guaranteed asset protection product

125

as a condition for making the loan. In order to offer any

126

guaranteed asset protection product, the motor vehicle retail

127

installment seller, sales finance company, or retail lessor, and

128

their assignees, must comply with the following:

129

     (a) The cost of a guaranteed asset protection product, with

130

respect to any loan covered by the product, may not exceed the

131

amount of the indebtedness.

132

     (b) Any contract or agreement pertaining to a guaranteed

133

asset protection product is governed by this section.

134

     (c) The guaranteed asset protection product is considered

135

an obligation of any person who purchases or otherwise acquires

136

the loan contract covering the product.

137

     (d) Entities providing guaranteed asset protection products

138

shall provide readily understandable disclosures that detail

139

eligibility requirements, conditions, refunds, and exclusions.

140

The disclosures must state that the purchase of the product is

141

optional. The disclosures must be in plain language and of a type

142

face and size that are easy to read.

143

     (e) Entities must provide a copy of the executed guaranteed

144

asset protection product contract to the buyer. The entity bears

145

the burden of proving that the contract was provided to the

146

buyer.

147

     (f) Entities may not offer a contract for a guaranteed

148

asset protection product which contains terms giving the entity

149

the right to unilaterally modify the contract unless:

150

     1. The modification is favorable to the buyer and is made

151

without an additional charge to the buyer; or

152

     2. The buyer is notified of any proposed change and is

153

provided a reasonable opportunity to cancel the contract without

154

penalty before the change takes effect.

155

     (g) If a contract for a guaranteed asset protection product

156

is terminated, the entity must refund to the buyer any unearned

157

fees paid for the contract unless the contract provides

158

otherwise. A refund is not due to a consumer who receives a

159

benefit under such product. In order to receive a refund, the

160

buyer must notify the entity of the event terminating the

161

contract and request a refund within 90 days after the occurrence

162

of the event terminating the contract. Any entity may offer a

163

buyer a contract that does not provide for a refund only if the

164

entity also offers that buyer a bona fide option to purchase a

165

comparable contract that provides for a refund.

166

     Section 5.  Paragraph (r) is added to subsection (1) of

167

section 624.605, Florida Statutes, to read:

168

     624.605  "Casualty insurance" defined.--

169

     (1)  "Casualty insurance" includes:

170

     (r) Insurance for debt-cancellation products.--Insurance

171

that a creditor may purchase against the risk of financial loss

172

from the use of debt-cancellation products with consumer loans,

173

leases, or retail installment contracts. Insurance for debt-

174

cancellation products is not liability insurance but shall be

175

considered credit insurance only for the purposes of s.

176

631.52(4).

177

     1. For purposes of this paragraph, the term "debt-

178

cancellation product" means loan, lease, or retail installment

179

contract terms, or modifications to loan, lease, or retail

180

installment contracts, under which a creditor agrees to cancel or

181

suspend all or part of a customer's obligation to make payments

182

upon the occurrence of specified events and includes, but is not

183

limited to, debt-cancellation contracts, debt-suspension

184

agreements, and guaranteed asset-protection contracts. The term

185

does not include title insurance as defined in s. 624.608.

186

     2. Debt-cancellation products may be offered by financial

187

institutions, as defined in s. 655.005(1)(h), insured depository

188

institutions, as defined in 12 U.S.C. s. 1813(c), and

189

subsidiaries of such institutions, as provided in the financial

190

institution codes, or by other business entities as may be

191

specifically authorized by law, and such products are not

192

insurance for purposes of the Florida Insurance Code.

193

     Section 6.  Subsection (3) of section 627.553, Florida

194

Statutes, is amended to read:

195

     627.553  Debtor groups.--The lives of a group of individuals

196

may be insured under a policy issued to a creditor or its parent

197

holding company, or to a trustee or trustees or agent designated

198

by two or more creditors, which creditor, holding company,

199

affiliate, trustee or trustees, or agent shall be deemed the

200

policyholder, to insure debtors of the creditor or creditors,

201

subject to the following requirements:

202

     (3)  The amount of insurance on the life of any debtor shall

203

at no time exceed the amount owed by the debtor her or him which

204

is repayable in installments to the creditor or $50,000,

205

whichever is less, except that loans not exceeding 1 year's

206

duration shall not be subject to such limits. However, on such

207

loans not exceeding 1 year's duration, the limit of coverage

208

shall not exceed $50,000 with any one insurer.

209

     Section 7.  Paragraph (b) of subsection (1) of section

210

627.679, Florida Statutes, is amended to read:

211

     627.679  Amount of insurance; disclosure.--

212

     (1)

213

     (b)  The total amount of credit life insurance on the life

214

of any debtor with respect to any loan or loans covered in one or

215

more insurance policies shall at no time exceed the amount of

216

indebtedness $50,000 with any one creditor, except that loans not

217

exceeding 1 year's duration shall not be subject to such limits,

218

and on such loans not exceeding 1 year's duration, the limits of

219

coverage shall not exceed $50,000 with any one insurer.

220

     Section 8.  Subsection (2) of section 627.681, Florida

221

Statutes, is amended to read:

222

     627.681  Term and evidence of insurance.--

223

     (2)  The term of credit disability insurance on any debtor

224

insured under this section shall not exceed the term of

225

indebtedness 10 years, and for credit transactions that exceed 60

226

months, coverage shall not exceed 60 monthly indemnities.

227

     Section 9.  Paragraphs (g) and (h) of subsection (1) of

228

section 655.005, Florida Statutes, are amended, and paragraph (t)

229

is added to that subsection, to read:

230

     655.005  Definitions.--

231

     (1)  As used in the financial institutions codes, unless the

232

context otherwise requires, the term:

233

     (g)  "Federal financial institution" means a federally or

234

nationally chartered or organized financial institution

235

association, bank, savings bank, or credit union.

236

     (h)  "Financial institution" means a state or federal

237

savings or thrift association, bank, savings bank, trust company,

238

international bank agency, international banking organization,

239

international branch, international representative office, or

240

international administrative office, or credit union; an

241

agreement corporation operating under s. 25 of the Federal

242

Reserve Act, 12 U.S.C. ss. 601 et seq.; or an Edge Act

243

corporation organized under s. 25(a) of the Federal Reserve Act,

244

12 U.S.C. ss. 611 et seq.

245

     (t) "Debt-cancellation products" means loan, lease, or

246

retail installment contract terms, or modifications or addenda to

247

loan, lease, or retail installment contracts, under which a

248

creditor agrees to cancel or suspend all or part of a customer's

249

obligation to make payments upon the occurrence of specified

250

events and includes, but is not limited to, debt-cancellation

251

contracts, debt-suspension agreements, and guaranteed asset-

252

protection contracts offered by financial institutions, insured

253

depository institutions, as defined in 12 U.S.C. s. 1813(c), and

254

subsidiaries of such institutions. The term does not include

255

title insurance as defined in s. 624.608.

256

     Section 10.  Subsection (1) of section 655.79, Florida

257

Statutes, is amended to read:

258

     655.79  Deposits and accounts in two or more names;

259

presumption as to vesting on death.--

260

     (1)  Unless otherwise expressly provided in a contract,

261

agreement, or signature card executed in connection with the

262

opening or maintenance of an account, including a certificate of

263

deposit, a deposit account in the names of two or more persons

264

shall be presumed to have been intended by such persons to

265

provide that, upon the death of any one of them, all rights,

266

title, interest, and claim in, to, and in respect of such deposit

267

account, less all proper setoffs and charges in favor of the

268

institution, vest in the surviving person or persons. Any deposit

269

or account made in the name of two persons who are husband and

270

wife shall be considered a tenancy by the entirety unless

271

otherwise specified in writing.

272

     Section 11.  Section 655.947, Florida Statutes, is created

273

to read:

274

     655.947 Debt-cancellation products.--

275

     (1) Debt-cancellation products may be offered, and a fee

276

may be charged, by financial institutions and subsidiaries of

277

financial institutions subject to this section and the rules and

278

orders of the commission or office. As used in this section, the

279

term "financial institutions" includes those institutions defined

280

in s. 655.005(1), insured depository institutions, as defined in

281

12 U.S.C. s. 1813, and subsidiaries of these institutions.

282

     (2) A financial institution must manage the risks

283

associated with debt-cancellation products in accordance with

284

prudent safety and soundness principles. A financial institution

285

must establish and maintain effective risk-management and control

286

processes over its debt-cancellation products and programs. These

287

processes must include appropriate recognition and financial

288

reporting of income, expenses, assets, and liabilities, and

289

appropriate treatment of all expected and unexpected losses

290

associated with the products. Each financial institution should

291

also assess the adequacy of its internal control and risk-

292

mitigation activities in view of the nature and scope of its

293

debt-cancellation products and programs.

294

     (3) The commission shall adopt rules pursuant to ss.

295

120.536(1) and 120.54 to administer this section, which rules

296

must be consistent with 12 C.F.R. part 37, as amended.

297

     (4) For purposes of this section and any rules adopted

298

pursuant to this section, a periodic payment option is not

299

required to be offered for any debt-cancellation product designed

300

to protect a customer against a deficiency between the

301

outstanding loan or lease amount and the value of the motor

302

vehicle that is used as collateral for the loan or lease.

303

     Section 12.  Section 655.954, Florida Statutes, is amended

304

to read:

305

     655.954  Financial institution loans; credit cards.--

306

     (1)  Notwithstanding any other provision of law, a financial

307

institution shall have the power to make loans or extensions of

308

credit to any person on a credit card or overdraft financing

309

arrangement and to charge, in any billing cycle, interest on the

310

outstanding amount at a rate that is specified in a written

311

agreement, between the financial institution and borrower,

312

governing the credit card account.  Such credit card agreement

313

may modify any terms or conditions of such credit card account

314

upon prior written notice of such modification as specified by

315

the terms of the agreement governing the credit card account or

316

by the Truth in Lending Act, 15 U.S.C. ss. 1601 et seq as

317

amended, and the rules and regulations adopted thereunder. Any

318

such notice provided by a financial institution shall specify

319

that the borrower has the right to surrender the credit card

320

whereupon the borrower shall have the right to continue to pay

321

off the borrower's credit card account in the same manner and

322

under the same terms and conditions as then in effect.  The

323

borrower's failure to surrender the credit card prior to the

324

modifications becoming effective shall constitute a consent to

325

the modifications.

326

     (2) In conjunction with entering into any contract or

327

agreement for a loan, line of credit, or loan extension, a

328

financial institution, an insured depository institution, as

329

defined in 12 U.S.C. s. 1813, and subsidiaries of these

330

institutions, may offer, for a fee or otherwise, optional debt-

331

cancellation products under s. 655.947 and the rules adopted

332

under that section. The financial institution may not require a

333

person to purchase a debt-cancellation product as a condition for

334

a loan, line of credit, or loan extension.

335

     (3)(2) For the purpose of this section, the term:

336

     (a)  "Billing cycle" has the same meaning as ascribed to it

337

under the federal Truth in Lending Act, as amended, 15 U.S.C. ss.

338

1601 et seq., and the associated regulations which are in effect

339

as of January 31, 2008 June 30, 1992.

340

     (b)  "Interest" means those charges considered a finance

341

charge under the federal Truth in Lending Act, as amended, 15

342

U.S.C. ss. 1601 et seq., and the associated regulations which are

343

in effect as of January 31, 2008 June 30, 1992.

344

     Section 13.  Section 655.967, Florida Statutes, is created

345

to read:

346

     655.967 State-funded endowments.--A state-mandated

347

endowment funded through a General Appropriations Act prior to

348

1990 may be maintained in trust accounts in financial

349

institutions, as defined in s. 655.005.

350

     Section 14.  Subsection (2) of section 658.21, Florida

351

Statutes, is amended to read:

352

     658.21  Approval of application; findings required.--The

353

office shall approve the application if it finds that:

354

     (2)  The proposed capitalization is in such amount as the

355

office deems adequate, but in no case may the total capital

356

accounts at opening for a bank be less than $8 $6 million if the

357

proposed bank is to be located in any county which is included in

358

a metropolitan statistical area, or $4 million if the proposed

359

bank is to be located in any other county. The total capital

360

accounts at opening for a trust company may not be less than $3

361

$2 million. The organizing directors of the proposed bank must

362

directly own or control at least the lesser of $3 million or 25

363

percent of the bank's total capital accounts proposed at opening,

364

as approved by the office. If the proposed bank will be owned by

365

a single-bank holding company, the organizing directors of the

366

proposed bank collectively must directly own or control at least

367

an amount of the single-bank holding company's capital accounts

368

equal to the lesser of $3 million or 25 percent of the proposed

369

bank's total capital accounts proposed at opening, as approved by

370

the office. If the proposed bank will be owned by an existing

371

multibank holding company, the proposed directors must have a

372

substantial capital investment in the holding company, as

373

determined by the office. However, the investment is not required

374

to exceed the amount otherwise required for a single-bank holding

375

company application. Of total capital accounts at opening, as

376

noted in the application or amendments or changes to the

377

application, at least 25 percent of the capital shall be directly

378

owned or controlled by the organizing directors of the bank.

379

Directors of banks owned by single-bank holding companies shall

380

have direct ownership or control of at least 25 percent of the

381

bank holding company's capital accounts. The office may disallow

382

illegally obtained currency, monetary instruments, funds, or

383

other financial resources from the capitalization requirements of

384

this section. The proposed stock offering must comply with the

385

requirements of ss. 658.23-658.25 and 658.34-658.37.

386

     Section 15.  Section 658.34, Florida Statutes, is amended to

387

read:

388

     658.34  Shares of capital stock.--

389

     (1)  A bank or trust company shall issue its capital stock

390

with par value of not more than $100 nor less than $1 per share.

391

     (2) A No bank or trust company may not shall issue any

392

shares of capital stock at a price less than par value, and prior

393

to issuance, any such shares must be fully paid in cash.

394

     (3)  With the approval of the office, a bank or trust

395

company may issue preferred stock of one or more classes in an

396

amount and with a par value as approved by the office.

397

     (4)  With the approval of the office, a bank or trust

398

company may issue less than all the number of shares of any of

399

its capital stock authorized by its articles of incorporation.

400

Such authorized but unissued shares may be issued only for the

401

following purposes:

402

     (a) To provide for stock options and warrants as provided

403

in s. 658.35.

404

     (b)  To declare or pay a stock dividend; however, any such

405

stock dividend must comply with the provisions of this section

406

and s. 658.37.

407

     (c) To increase the capital of the bank or trust company,

408

with the approval of the office.

409

     (5) A financial institution may not issue or sell stock of

410

the same class which creates different rights, options, warrants,

411

or benefits among the purchasers or stockholders of that class of

412

stock. This subsection does not prohibit the financial

413

institution from creating uniform restrictions on the transfer of

414

stock as permitted in s. 607.0627.

415

     Section 16.  Subsection (2) of section 658.36, Florida

416

Statutes, is amended to read:

417

     658.36  Changes in capital.--

418

     (2) A Any state bank or trust company may, with the

419

approval of the office, provide for an increase in its capital

420

stock only if the state bank or trust company files a written

421

notice 15 days before the increase.

422

     Section 17.  Subsections (2) and (5) of section 658.44,

423

Florida Statutes, are amended to read:

424

     658.44  Approval by stockholders; rights of dissenters;

425

preemptive rights.--

426

     (2)  Written notice of the meeting of, or proposed written

427

consent action by, the stockholders of each constituent state

428

bank or state trust company shall be given to each stockholder of

429

record, whether or not entitled to vote, and whether the meeting

430

is an annual or a special meeting or whether the vote is to be by

431

written consent pursuant to s. 607.0704, and the notice shall

432

state that the purpose or one of the purposes of the meeting, or

433

of the proposed action by the stockholders without a meeting, is

434

to consider the proposed plan of merger and merger agreement.

435

Except to the extent provided otherwise with respect to

436

stockholders of a resulting bank or trust company pursuant to

437

subsection (7), the notice shall also state that dissenting

438

stockholders including those not entitled to vote but dissenting

439

as set forth in paragraph (c), will be entitled to payment in

440

cash of the value of only those shares held by the stockholders:

441

     (a)  Which at a meeting of the stockholders are voted

442

against the approval of the plan of merger and merger agreement;

443

     (b)  As to which, if the proposed action is to be by written

444

consent of stockholders pursuant to s. 607.0704, such written

445

consent is not given by the holder thereof; or

446

     (c)  With respect to which the holder thereof has given

447

written notice to the constituent state bank or trust company, at

448

or prior to the meeting of the stockholders or on or prior to the

449

date specified for action by the stockholders without a meeting

450

pursuant to s. 607.0704 in the notice of such proposed action,

451

that the stockholder dissents from the plan of merger and merger

452

agreement, and which shares are not voted for approval of the

453

plan or written consent given under paragraph (a) or paragraph

454

(b).

455

456

Hereinafter in this section, the term "dissenting shares" means

457

and includes only those shares, which may be all or less than all

458

the shares of any class owned by a stockholder, described in

459

paragraphs (a), (b), and (c).

460

     (5) The fair value, as defined in s. 607.1301(4), of

461

dissenting shares of each constituent state bank or state trust

462

company, the owners of which have not accepted an offer for such

463

shares made pursuant to subsection (3), shall be determined as of

464

the effective date of the merger under ss. 607.1326-607.1331,

465

except as the procedures for notice and demand are otherwise

466

provided in this section by three appraisers, one to be selected

467

by the owners of at least two-thirds of such dissenting shares,

468

one to be selected by the board of directors of the resulting

469

state bank, and the third to be selected by the two so chosen.

470

The value agreed upon by any two of the appraisers shall control

471

and be final and binding on all parties. If, within 90 days from

472

the effective date of the merger, for any reason one or more of

473

the appraisers is not selected as herein provided, or the

474

appraisers fail to determine the value of such dissenting shares,

475

the office shall cause an appraisal of such dissenting shares to

476

be made which will be final and binding on all parties. The

477

expenses of appraisal shall be paid by the resulting state bank

478

or trust company.

479

     Section 18.  This act shall take effect October 1, 2008.