Florida Senate - 2025 CS for CS for SB 498
By the Committees on Banking and Insurance; and Judiciary; and
Senator Grall
597-03070-25 2025498c2
1 A bill to be entitled
2 An act relating to trust fund interest for purposes
3 approved by the Supreme Court; creating s. 655.97,
4 F.S.; authorizing financial institutions to hold funds
5 in specified trust accounts to be used for specified
6 purposes; requiring such financial institutions to pay
7 a certain interest rate or dividend; prohibiting the
8 interest rate from being less than a specified
9 percentage; requiring a financial institution to
10 submit a rate validation sheet and affidavit to the
11 Chief Financial Officer attesting it will pay a
12 certain interest rate or dividend; requiring that the
13 affidavit attest that certain information is true and
14 factual; requiring the Chief Financial Officer to
15 verify certain information; providing applicability;
16 providing an effective date.
17
18 WHEREAS, in September 1981, the Florida Supreme Court
19 implemented the nation’s first Interest on Trust Accounts (IOTA)
20 program, establishing a vital funding source for civil legal
21 aid, justice system improvements, and public service programs
22 for law students, and
23 WHEREAS, Funding Florida Legal Aid (FFLA), formerly known
24 as The Florida Bar Foundation, and the Florida Bankers
25 Association have cooperated for decades to sustain the program
26 and encourage participation, and
27 WHEREAS, in March 2023, the Florida Supreme Court adopted
28 new rules requiring lawyers to secure interest rates based on
29 the Wall Street Journal Prime Rate, compelling banks to pay
30 higher rates for IOTA accounts than for other similar accounts,
31 and
32 WHEREAS, 44 states, the District of Columbia, and Puerto
33 Rico have mandatory IOTA programs modeled after Florida’s pre
34 2023 system, while 5 states and the U.S. Virgin Islands operate
35 voluntary or opt-out programs, and
36 WHEREAS, the 2023 rule change made Florida an outlier
37 compared to other jurisdictions where IOTA rates are typically
38 benchmarked against interest-bearing checking account rates, and
39 WHEREAS, the Wall Street Journal Prime Rate serves as a
40 benchmark for lending and is not used to set deposit account
41 rates, and
42 WHEREAS, the 2023 rule change resulted in banks paying
43 higher rates on funds in IOTA accounts, resulting in record
44 revenues, exceeding $279 million, paid to FFLA during the 2023
45 2024 fiscal year, nearly four times the prior peak rate and far
46 exceeding average annual interest revenues, and
47 WHEREAS, in October 2024, the Florida Supreme Court
48 authorized FFLA to hold nearly $143 million in reserve, and
49 WHEREAS, it is in the best interests of this state for the
50 Legislature to establish statutory benchmarks for IOTA rates to
51 ensure regulatory safety, fairness, and sustainability, similar
52 to the quarterly interest rate determinations made by the Chief
53 Financial Officer for interest paid on court judgments, NOW,
54 THEREFORE,
55
56 Be It Enacted by the Legislature of the State of Florida:
57
58 Section 1. Section 655.97, Florida Statutes, is created to
59 read:
60 655.97 Lawyer or law firm trust account interest rates.—
61 (1) A financial institution may hold funds in an interest
62 bearing trust account of a lawyer or law firm in which the
63 institution remits interest or dividends on the balance of the
64 deposited funds to an entity established by the Supreme Court
65 for the purpose of providing or facilitating the provision of
66 free legal services to low-income individuals or for other
67 purposes authorized by the Supreme Court. If the institution
68 holds such an account, it must pay the highest interest rate or
69 dividend generally available from the institution to its
70 comparable business or consumer accounts or nonmaturing deposit
71 accounts, provided that the trust account meets or exceeds the
72 same minimum balance or other account requirements, but the
73 interest rate on trust accounts may not be less than 0.25
74 percent.
75 (a) The financial institution must submit a rate validation
76 sheet and affidavit to the Chief Financial Officer by the tenth
77 day of each quarter attesting that it will pay the same interest
78 rate or dividend on the lawyer or law firm trust accounts that
79 it is paying on its comparable business or consumer accounts or
80 nonmaturing deposit accounts or the minimum 0.25 percent.
81 (b) The affidavit must attest that the rate information
82 submitted on the rate validation sheet is true and factual.
83 (c) The Chief Financial Officer shall verify that the rate
84 validation sheet and affidavit have been received by the
85 Department of Financial Services.
86 (2) This section does not apply to interest rates
87 established by written contract or obligations unrelated to the
88 trust accounts described by this section.
89 Section 2. This act shall take effect upon becoming a law.