By McCall H.B. No. 1502
77R1068 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to continuation and functions of the Texas Department of
1-3 Banking and the regulation of certain financial institutions and
1-4 businesses; providing an administrative penalty.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 12.107, Finance Code, is amended to read
1-7 as follows:
1-8 Sec. 12.107. CONFLICT OF INTEREST. (a) In this section,
1-9 "Texas trade association" means a cooperative and voluntarily
1-10 joined association of business or professional competitors in this
1-11 state designed to assist its members and its industry or profession
1-12 in dealing with mutual business or professional problems and in
1-13 promoting their common interest.
1-14 (b) A person may not be a department employee employed in a
1-15 "bona fide executive, administrative, or professional capacity," as
1-16 that phrase is used for purposes of establishing an exemption to
1-17 the overtime provisions of the federal Fair Labor Standards Act of
1-18 1938 (29 U.S.C. Section 201 et seq.), and its subsequent
1-19 amendments, if:
1-20 (1) the person is an officer, employee, or paid
1-21 consultant of a Texas trade association in an industry regulated by
1-22 the department; or
1-23 (2) the person's spouse is an officer, manager, or
1-24 paid consultant of a Texas trade association in an industry
2-1 regulated by the department.
2-2 (c) A person may not act as the general counsel to the
2-3 department if the person is required to register as a lobbyist
2-4 under Chapter 305, Government Code, because of the person's
2-5 activities for compensation on behalf of a profession related to
2-6 the operation of the department [An officer or employee of the
2-7 department may not be:]
2-8 [(1) an officer, employee, or paid consultant of a
2-9 trade association in an industry regulated by the department; or]
2-10 [(2) related within the second degree by affinity or
2-11 consanguinity, as determined under Chapter 573, Government Code, to
2-12 a person who is an officer, employee, or paid consultant of a trade
2-13 association in an industry regulated by the department].
2-14 (d) [(b)] Before the 11th day after the date on which an
2-15 employee begins employment with the department, the employee shall
2-16 read the conflict-of-interest statutes applicable to employees of
2-17 the department and sign a notarized affidavit stating that the
2-18 employee has read those statutes.
2-19 SECTION 2. Section 12.108, Finance Code, is amended to read
2-20 as follows:
2-21 Sec. 12.108. CONSUMER INFORMATION AND COMPLAINTS. (a) The
2-22 banking commissioner shall:
2-23 (1) prepare information of consumer interest
2-24 describing:
2-25 (A) the regulatory functions of the department;
2-26 and
2-27 (B) the department's procedures by which
3-1 consumer complaints are filed with and resolved by the department;
3-2 and
3-3 (2) make the information available to the public and
3-4 appropriate state agencies.
3-5 (b) The department shall maintain a file on each written
3-6 complaint filed with the department. The file must include:
3-7 (1) the name of the person who filed the complaint;
3-8 (2) the date the complaint is received by the
3-9 department;
3-10 (3) the subject matter of the complaint;
3-11 (4) the name of each person contacted in relation to
3-12 the complaint;
3-13 (5) a summary of the results of the review or
3-14 investigation of the complaint; and
3-15 (6) an explanation of the reason the file was closed,
3-16 if the agency closed the file without taking action other than to
3-17 investigate the complaint.
3-18 (c) The department shall provide to the person filing the
3-19 complaint and to each person who is a subject of the complaint a
3-20 copy of the department's policies and procedures relating to
3-21 complaint investigation and resolution.
3-22 (d) The department, at least quarterly until final
3-23 disposition of the complaint, shall notify the person filing the
3-24 complaint and each person who is a subject of the complaint of the
3-25 status of the investigation [banking commissioner shall keep an
3-26 information file about each complaint filed with the commissioner
3-27 relating to an entity regulated by the department.]
4-1 [(c) At least quarterly until final disposition of any
4-2 written complaint filed with the banking commissioner relating to
4-3 an entity regulated by the department, the commissioner shall
4-4 notify the parties to the complaint of the status of the complaint]
4-5 unless the notice would jeopardize an undercover investigation.
4-6 SECTION 3. Section 12.109, Finance Code, is amended to read
4-7 as follows:
4-8 Sec. 12.109. SUNSET PROVISION. The office of banking
4-9 commissioner is subject to Chapter 325, Government Code (Texas
4-10 Sunset Act). Unless continued in existence as provided by that
4-11 chapter, the office is abolished September 1, 2013 [2001].
4-12 SECTION 4. Subchapter B, Chapter 12, Finance Code, is
4-13 amended by adding Sections 12.111-12.113 to read as follows:
4-14 Sec. 12.111. STANDARDS OF CONDUCT. The banking commissioner
4-15 or the banking commissioner's designee shall provide to agency
4-16 employees, as often as necessary, information regarding the
4-17 requirements for office or employment under this chapter, including
4-18 information regarding a person's responsibilities under applicable
4-19 laws relating to standards of conduct for state officers or
4-20 employees.
4-21 Sec. 12.112. EQUAL EMPLOYMENT OPPORTUNITY POLICY. (a) The
4-22 banking commissioner or the banking commissioner's designee shall
4-23 prepare and maintain a written policy statement that implements a
4-24 program of equal employment opportunity to ensure that all
4-25 personnel decisions are made without regard to race, color,
4-26 disability, sex, religion, age, or national origin.
4-27 (b) The policy statement must include:
5-1 (1) personnel policies, including policies relating to
5-2 recruitment, evaluation, selection, training, and promotion of
5-3 personnel, that show the intent of the department to avoid the
5-4 unlawful employment practices described by Chapter 21, Labor Code;
5-5 and
5-6 (2) an analysis of the extent to which the composition
5-7 of the department's personnel is in accordance with state and
5-8 federal law and a description of reasonable methods to achieve
5-9 compliance with state and federal law.
5-10 (c) The policy statement must:
5-11 (1) be updated annually;
5-12 (2) be reviewed by the state Commission on Human
5-13 Rights for compliance with Subsection (b)(1); and
5-14 (3) be filed with the governor's office.
5-15 Sec. 12.113. EMPLOYEE INCENTIVE PROGRAM. The banking
5-16 commissioner or the banking commissioner's designee shall provide
5-17 to agency employees information and training on the benefits and
5-18 methods of participation in the State Employee Incentive Program.
5-19 SECTION 5. Section 154.109, Finance Code, is amended by
5-20 adding Subsection (d) to read as follows:
5-21 (d) The commissioner may place on probation a permit holder
5-22 whose permit is suspended. If a permit suspension is probated, the
5-23 commissioner may require the permit holder:
5-24 (1) to report regularly to the department on matters
5-25 that are the basis of the probation; or
5-26 (2) to limit its activities as prescribed by the
5-27 commissioner.
6-1 SECTION 6. Section 154.151, Finance Code, is amended by
6-2 adding Subsections (d) and (e) to read as follows:
6-3 (d) A sales contract for prepaid funeral benefits, whether
6-4 in English or Spanish, must be written in plain language designed
6-5 to be easily understood by the average consumer. The contract must
6-6 be printed in an easily readable font and type size. The
6-7 department shall provide model contracts complying with this
6-8 subsection and shall enforce this subsection.
6-9 (e) The Finance Commission of Texas by rule shall establish
6-10 a standard disclosure that must be included in each contract to
6-11 inform purchasers of the goods and services that will be provided
6-12 or excluded under the contract and the circumstances under which
6-13 the contract may be modified after death of the beneficiary.
6-14 SECTION 7. Section 154.154, Finance Code, is amended to read
6-15 as follows:
6-16 Sec. 154.154. AGREEMENT TO PAY FINANCE CHARGE PROHIBITED. A
6-17 [purchaser of a] prepaid funeral benefits contract may not require
6-18 the purchaser [agree in writing] to pay the seller a finance charge
6-19 [in accordance with Chapter 345 on an amount due the seller on the
6-20 contract].
6-21 SECTION 8. Section 154.155(d), Finance Code, is amended to
6-22 read as follows:
6-23 (d) The purchaser is entitled to receive [only] the actual
6-24 amount paid by the purchaser and half of all earnings attributable
6-25 to that money, less the amount permitted to be retained as provided
6-26 by Section 154.252, except as provided by Subsection (e) and by
6-27 Section [Sections] 154.205 [and 154.254].
7-1 SECTION 9. Section 154.252, Finance Code, is amended to read
7-2 as follows:
7-3 Sec. 154.252. RETENTION OF MONEY FOR EXPENSES. The [To
7-4 cover its selling expenses, service costs, and general overhead,
7-5 the] seller of a trust-funded prepaid funeral benefits contract may
7-6 retain for the seller's use and benefit an amount not to exceed
7-7 one-half of all money collected or paid until the seller has
7-8 received an amount equal to the lesser of:
7-9 (1) the amount spent by the seller on selling
7-10 expenses, service costs, and general overhead, as determined and
7-11 documented according to rules adopted by the Finance Commission of
7-12 Texas; or
7-13 (2) 10 percent of the total amount the purchaser
7-14 agreed to pay under the contract.
7-15 SECTION 10. Subchapter F, Chapter 154, Finance Code, is
7-16 amended by adding Section 154.265 to read as follows:
7-17 Sec. 154.265. RETURN OF INTEREST FOLLOWING FUNERAL. On
7-18 completion of the funeral service for a beneficiary named in a
7-19 prepaid funeral benefits contract, the purchaser, or the decedent's
7-20 estate if the decedent was the purchaser, is entitled to receive
7-21 half of all earnings attributable to money paid to the seller under
7-22 the contract, minus any amount of those earnings used to fulfill
7-23 the obligations of the seller under the contract after all other
7-24 money dedicated to fulfillment of those obligations was applied to
7-25 that payment.
7-26 SECTION 11. Section 154.406, Finance Code, is amended to
7-27 read as follows:
8-1 Sec. 154.406. ADMINISTRATIVE PENALTY. (a) After notice and
8-2 opportunity for hearing, the commissioner may impose an
8-3 administrative penalty on a person who:
8-4 (1) violates this chapter or a final order of the
8-5 commissioner or rule of the Finance Commission of Texas
8-6 [commissioner or department;] and
8-7 [(2)] does not correct the violation before the 31st
8-8 day after the date the person receives written notice of the
8-9 violation from the department; or
8-10 (2) engages in a pattern of violations, as determined
8-11 by the commissioner, including violations corrected as provided by
8-12 Subdivision (1).
8-13 (b) The amount of the penalty for each violation may not
8-14 exceed $1,000 for each day the violation occurs.
8-15 (c) In determining the amount of the penalty, the
8-16 commissioner shall consider the seriousness of the violation, the
8-17 person's history of violations, including violations corrected as
8-18 provided by Subsection (a)(1), and the person's good faith in
8-19 attempting to comply with this chapter.
8-20 (d) The imposition of a penalty under this section is
8-21 subject to judicial review as a contested case under Chapter 2001,
8-22 Government Code.
8-23 (e) The commissioner may collect the penalty in the same
8-24 manner that a money judgment is enforced in district court.
8-25 SECTION 12. Section 345.003(b), Finance Code, is amended to
8-26 read as follows:
8-27 (b) "Services" includes work or labor described by
9-1 Subsection (a) and that is:
9-2 (1) a medical or dental service; or
9-3 (2) [a prepaid funeral benefit regulated under Chapter
9-4 154; and]
9-5 [(3)] a maintenance or service contract or warranty.
9-6 SECTION 13. Subchapter A, Chapter 712, Health and Safety
9-7 Code, is amended by adding Section 712.008 to read as follows:
9-8 Sec. 712.008. RULES. The Finance Commission of Texas may
9-9 adopt rules to enforce and administer this chapter.
9-10 SECTION 14. Section 712.044, Health and Safety Code, is
9-11 amended to read as follows:
9-12 Sec. 712.044. EXAMINATION OF FUND RECORDS; EXAMINATION FEES
9-13 AND EXPENSES. (a) The books and records of a corporation
9-14 [relating to its fund] shall be examined annually or as often as
9-15 necessary by the commissioner. The examination shall cover the
9-16 period of time from the date of the last examination of the
9-17 corporation's books and records [relating to its fund].
9-18 (b) A corporation that is examined under this section shall
9-19 make its books and records [relating to its fund] available for
9-20 examination by the banking department upon reasonable notice to the
9-21 corporation and shall pay to the commissioner for the examination a
9-22 reasonable and necessary fee set annually by the commissioner to
9-23 defray the cost of administering this chapter.
9-24 SECTION 15. Sections 712.0441(a)-(c), Health and Safety
9-25 Code, are amended to read as follows:
9-26 (a) After notice and opportunity for hearing, the
9-27 commissioner may impose an administrative penalty on a person who:
10-1 (1) violates this chapter or a final order of the
10-2 commissioner or rule of the Finance Commission of Texas and does
10-3 not correct the violation before the 31st day after the date the
10-4 person receives written notice of the violation from the banking
10-5 department; or
10-6 (2) engages in a pattern of violations, as determined
10-7 by the commissioner, including violations corrected as provided by
10-8 this section.
10-9 (b) The amount of the penalty for each violation may not
10-10 exceed $1,000 for each day the violation occurs.
10-11 (c) In determining the amount of the penalty, the
10-12 commissioner shall consider the seriousness of the violation, the
10-13 person's history of violations, including violations corrected as
10-14 provided by this section, and the person's good faith in attempting
10-15 to comply with this chapter. The imposition of a penalty under
10-16 this section is subject to judicial review as a contested case
10-17 under Chapter 2001, Government Code. The commissioner may collect
10-18 the penalty in the same manner that a money judgment is enforced in
10-19 district court. [A corporation shall be subject to a civil penalty
10-20 upon the occurrence of any of the following violations:]
10-21 [(1) the corporation does not make a deposit in its
10-22 fund as required by Section 712.028;]
10-23 [(2) the corporation does not file a statement of
10-24 funds as required by Section 712.041; or]
10-25 [(3) the corporation does not pay the filing fee as
10-26 required by Section 712.042.]
10-27 [(b) The trustee of a fund shall be subject to a civil
11-1 penalty upon the occurrence of either of the following violations:]
11-2 [(1) the trustee does not file a report required by
11-3 the commissioner under Section 712.043 within 30 days after the
11-4 date of the commissioner's request; or]
11-5 [(2) the fund does not comply with this chapter.]
11-6 [(c) The civil penalty that may be imposed under Subsection
11-7 (a) or (b) shall not exceed $250 per violation for each day that
11-8 the violation persists, provided, that the aggregate civil penalty
11-9 for all violations shall not exceed $500 per day. A corporation or
11-10 trustee shall have no civil penalty liability if within 30 days
11-11 after receiving written notice from the commissioner of the
11-12 violation the corporation or trustee corrects such violation by
11-13 performing the required duty or act. Any such civil penalty may be
11-14 imposed by the commissioner after notice and opportunity for
11-15 hearing in accordance with the procedures for a contested case
11-16 hearing under the Administrative Procedure and Texas Register Act.
11-17 In determining the amount of the penalty, the commissioner shall
11-18 consider the seriousness of the violation and the good faith of the
11-19 corporation or trustee in its attempts to achieve compliance. The
11-20 amount of such penalty may be collected by the commissioner in the
11-21 same manner that money judgments are enforced in the district
11-22 courts of this state.]
11-23 SECTION 16. Section 154.254, Finance Code, is repealed.
11-24 SECTION 17. This Act takes effect September 1, 2001.