By Sibley S.B. No. 314
Substitute the following for S.B. No. 314:
By Averitt C.S.S.B. No. 314
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the continuation and functions of the Texas Department
1-3 of 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 that:
1-12 (1) is primarily designed to assist its members and
1-13 its industry or profession in dealing with mutual business or
1-14 professional problems and in promoting their common interests; and
1-15 (2) includes business and professional competitors
1-16 located in this state among its members.
1-17 (b) A person may not be a department employee if:
1-18 (1) the person is an officer, employee, or paid
1-19 consultant of a Texas trade association in an industry regulated by
1-20 the department; or
1-21 (2) the person's spouse is an officer, manager, or
1-22 paid consultant of a Texas trade association in an industry
1-23 regulated by the department.
1-24 (c) A person may not act as the general counsel to the
2-1 department if the person is required to register as a lobbyist
2-2 under Chapter 305, Government Code, because of the person's
2-3 activities for compensation on behalf of a profession related to
2-4 the operation of the department [An officer or employee of the
2-5 department may not be:]
2-6 [(1) an officer, employee, or paid consultant of a
2-7 trade association in an industry regulated by the department; or]
2-8 [(2) related within the second degree by affinity or
2-9 consanguinity, as determined under Chapter 573, Government Code, to
2-10 a person who is an officer, employee, or paid consultant of a trade
2-11 association in an industry regulated by the department].
2-12 (d) [(b)] Before the 11th day after the date on which an
2-13 employee begins employment with the department, the employee shall
2-14 read the conflict-of-interest statutes applicable to employees of
2-15 the department and sign a notarized affidavit stating that the
2-16 employee has read those statutes.
2-17 SECTION 2. Section 12.108, Finance Code, is amended to read
2-18 as follows:
2-19 Sec. 12.108. CONSUMER INFORMATION AND COMPLAINTS. (a) The
2-20 banking commissioner shall:
2-21 (1) prepare information of consumer interest
2-22 describing:
2-23 (A) the regulatory functions of the department;
2-24 and
2-25 (B) the department's procedures by which
2-26 consumer complaints are filed with and resolved by the department;
2-27 and
3-1 (2) make the information available to the public and
3-2 appropriate state agencies.
3-3 (b) The department shall maintain a file on each written
3-4 complaint filed with the department. The file must include:
3-5 (1) the name of the person who filed the complaint;
3-6 (2) the date the complaint is received by the
3-7 department;
3-8 (3) the subject matter of the complaint;
3-9 (4) the name of each person contacted in relation to
3-10 the complaint;
3-11 (5) a summary of the results of the review or
3-12 investigation of the complaint; and
3-13 (6) an explanation of the reason the file was closed.
3-14 (c) The department shall provide to the person filing the
3-15 complaint and to each person who is a subject of the complaint a
3-16 written summary of the department's policies and procedures
3-17 relating to complaint investigation and resolution [banking
3-18 commissioner shall keep an information file about each complaint
3-19 filed with the commissioner relating to an entity regulated by the
3-20 department.]
3-21 [(c) At least quarterly until final disposition of any
3-22 written complaint filed with the banking commissioner relating to
3-23 an entity regulated by the department, the commissioner shall
3-24 notify the parties to the complaint of the status of the complaint
3-25 unless the notice would jeopardize an undercover investigation].
3-26 SECTION 3. Section 12.109, Finance Code, is amended to read
3-27 as follows:
4-1 Sec. 12.109. SUNSET PROVISION. The office of banking
4-2 commissioner is subject to Chapter 325, Government Code (Texas
4-3 Sunset Act). Unless continued in existence as provided by that
4-4 chapter, the office is abolished September 1, 2013 [2001].
4-5 SECTION 4. Subchapter B, Chapter 12, Finance Code, is amended
4-6 by adding Sections 12.111, 12.112, and 12.113 to read as follows:
4-7 Sec. 12.111. STANDARDS OF CONDUCT. The banking commissioner
4-8 or the banking commissioner's designee shall provide to agency
4-9 employees, as often as necessary, information regarding the
4-10 requirements for office or employment under this chapter, including
4-11 information regarding a person's responsibilities under applicable
4-12 laws relating to standards of conduct for state officers or
4-13 employees.
4-14 Sec. 12.112. EQUAL EMPLOYMENT OPPORTUNITY POLICY. (a) The
4-15 banking commissioner or the banking commissioner's designee shall
4-16 prepare and maintain a written policy statement that implements a
4-17 program of equal employment opportunity to ensure that all
4-18 personnel decisions are made without regard to race, color,
4-19 disability, sex, religion, age, or national origin.
4-20 (b) The policy statement must include:
4-21 (1) personnel policies, including policies relating to
4-22 recruitment, evaluation, selection, training, and promotion of
4-23 personnel, that show the intent of the department to avoid the
4-24 unlawful employment practices described by Chapter 21, Labor Code;
4-25 and
4-26 (2) an analysis of the extent to which the composition
4-27 of the department's personnel is in accordance with state and
5-1 federal law and a description of reasonable methods to achieve
5-2 compliance with state and federal law.
5-3 (c) The policy statement must:
5-4 (1) be updated annually;
5-5 (2) be reviewed by the state Commission on Human
5-6 Rights for compliance with Subsection (b)(1); and
5-7 (3) be filed with the governor's office.
5-8 Sec. 12.113. EMPLOYEE INCENTIVE PROGRAM. The banking
5-9 commissioner or the banking commissioner's designee shall provide
5-10 to agency employees information and training on the benefits and
5-11 methods of participation in the state employee incentive program.
5-12 SECTION 5. Section 154.109, Finance Code, is amended by
5-13 adding Subsection (d) to read as follows:
5-14 (d) The commissioner may place on probation a permit holder
5-15 whose permit is suspended. If a permit suspension is probated, the
5-16 commissioner may require the permit holder:
5-17 (1) to report regularly to the department on matters
5-18 that are the basis of the probation; or
5-19 (2) to limit its activities as prescribed by the
5-20 commissioner.
5-21 SECTION 6. Section 154.151, Finance Code, is amended by
5-22 adding Subsections (d) and (e) to read as follows:
5-23 (d) A sales contract for prepaid funeral benefits, whether
5-24 in English or Spanish, must be written in plain language designed
5-25 to be easily understood by the average consumer. The contract must
5-26 be printed in an easily readable font and type size. The
5-27 department shall provide model contracts complying with this
6-1 subsection and shall enforce this subsection.
6-2 (e) The Finance Commission of Texas by rule shall establish
6-3 a standard disclosure that must be included in each contract to
6-4 inform purchasers of the goods and services that will be provided
6-5 or excluded under the contract and the circumstances under which
6-6 the contract may be modified after death of the beneficiary.
6-7 SECTION 7. Subsection (d), Section 154.155, Finance Code, is
6-8 amended to read as follows:
6-9 (d) The purchaser is entitled to receive [only] the actual
6-10 amount paid by the purchaser and half of all earnings attributable
6-11 to that money, less the amount permitted to be retained as provided
6-12 by Section 154.252, except as provided by Subsection (e) and by
6-13 Sections 154.205 and 154.254.
6-14 SECTION 8. Section 154.252, Finance Code, is amended to read
6-15 as follows:
6-16 Sec. 154.252. RETENTION OF MONEY FOR EXPENSES. The [To cover
6-17 its selling expenses, service costs, and general overhead, the]
6-18 seller of a trust-funded prepaid funeral benefits contract may
6-19 retain for the seller's use and benefit an amount not to exceed
6-20 one-half of all money collected or paid until the seller has
6-21 received an amount equal to 10 percent of the total amount the
6-22 purchaser agreed to pay under the contract.
6-23 SECTION 9. Section 154.406, Finance Code, is amended to read
6-24 as follows:
6-25 Sec. 154.406. ADMINISTRATIVE PENALTY. (a) After notice and
6-26 opportunity for hearing, the commissioner may impose an
6-27 administrative penalty on a person who:
7-1 (1) violates this chapter or a final order of the
7-2 commissioner or rule of the Finance Commission of Texas
7-3 [commissioner or department;] and
7-4 [(2)] does not correct the violation before the 31st
7-5 day after the date the person receives written notice of the
7-6 violation from the department; or
7-7 (2) engages in a pattern of violations, as determined
7-8 by the commissioner.
7-9 (b) The amount of the penalty for each violation may not
7-10 exceed $1,000 for each day the violation occurs.
7-11 (c) In determining the amount of the penalty, the
7-12 commissioner shall consider the seriousness of the violation, the
7-13 person's history of violations, and the person's good faith in
7-14 attempting to comply with this chapter.
7-15 (d) The imposition of a penalty under this section is
7-16 subject to judicial review as a contested case under Chapter 2001,
7-17 Government Code.
7-18 (e) The commissioner may collect the penalty in the same
7-19 manner that a money judgment is enforced in district court.
7-20 SECTION 10. Subchapter I, Chapter 154, Finance Code, is
7-21 amended by adding Section 154.4061 to read as follows:
7-22 Sec. 154.4061. PATTERN OF WILFUL DISREGARD. (a) If, after a
7-23 hearing conducted as provided by Chapter 2001, Government Code, the
7-24 trier of fact finds that a violation of this chapter or a rule of
7-25 the Finance Commission of Texas establishes a pattern of wilful
7-26 disregard for the requirements of this chapter or rules of the
7-27 finance commission, the trier of fact shall recommend to the
8-1 commissioner that the maximum administrative penalty permitted
8-2 under Section 154.406 be imposed on the person committing the
8-3 violation or that the commissioner cancel or not renew the person's
8-4 permit under this chapter.
8-5 (b) For the purposes of this section, violations corrected
8-6 as provided by Section 154.406 may be included in determining
8-7 whether a pattern of wilful disregard for the requirements of this
8-8 chapter or rules of the finance commission exists.
8-9 SECTION 11. Subchapter A, Chapter 712, Health and Safety
8-10 Code, is amended by adding Section 712.008 to read as follows:
8-11 Sec. 712.008. RULES. The Finance Commission of Texas may
8-12 adopt rules to enforce and administer this chapter, including rules
8-13 establishing fees to defray the costs of enforcing and
8-14 administering this chapter.
8-15 SECTION 12. Section 712.042, Health and Safety Code, is
8-16 amended to read as follows:
8-17 Sec. 712.042. FEES. On filing a statement of funds under
8-18 Section 712.041, a corporation shall pay the commissioner a
8-19 reasonable and necessary fee set by rule adopted by the Finance
8-20 Commission of Texas under Section 712.008 [annually by the
8-21 commissioner] to defray the cost of administering this chapter.
8-22 SECTION 13. Section 712.044, Health and Safety Code, is
8-23 amended to read as follows:
8-24 Sec. 712.044. EXAMINATION OF [FUND] RECORDS; EXAMINATION
8-25 FEES AND EXPENSES. (a) The commissioner may examine the books and
8-26 records of a corporation relating to its fund, including deposits
8-27 to or withdrawals from the fund, income of the fund, and uses and
9-1 expenditures of that income, [shall be examined] annually or more
9-2 [as] often as necessary to protect the interest of plot owners. In
9-3 addition, the commissioner may examine consumer complaint files
9-4 relating to the fund or to discharge of the corporation's perpetual
9-5 care responsibilities, minutes of the corporation's board of
9-6 directors, cemetery dedication statements and plat maps, and lawn
9-7 crypt construction contracts and specifications [by the
9-8 commissioner. The examination shall cover the period of time from
9-9 the date of the last examination of the corporation's books and
9-10 records relating to its fund].
9-11 (b) A corporation that is examined under this section shall
9-12 make the specified [its] books and records [relating to its fund]
9-13 available for examination by the banking department upon reasonable
9-14 notice to the corporation and shall pay to the commissioner for the
9-15 examination a reasonable and necessary fee set by rules adopted by
9-16 the Finance Commission of Texas under Section 712.008 [annually by
9-17 the commissioner] to defray the cost of administering this chapter.
9-18 SECTION 14. Subsections (a), (b), and (c), Section 712.0441,
9-19 Health and Safety Code, are amended to read as follows:
9-20 (a) After notice and opportunity for hearing, the
9-21 commissioner may impose an administrative penalty on a person who:
9-22 (1) violates this chapter or a final order of the
9-23 commissioner or rule of the Finance Commission of Texas and does
9-24 not correct the violation before the 31st day after the date the
9-25 person receives written notice of the violation from the banking
9-26 department; or
9-27 (2) engages in a pattern of violations, as determined
10-1 by the commissioner.
10-2 (b) The amount of the penalty for each violation may not
10-3 exceed $1,000 for each day the violation occurs.
10-4 (c) In determining the amount of the penalty, the
10-5 commissioner shall consider the seriousness of the violation, the
10-6 person's history of violations, and the person's good faith in
10-7 attempting to comply with this chapter. The imposition of a
10-8 penalty under this section is subject to judicial review as a
10-9 contested case under Chapter 2001, Government Code. The
10-10 commissioner may collect the penalty in the same manner that a
10-11 money judgment is enforced in district court. [A corporation shall
10-12 be subject to a civil penalty upon the occurrence of any of the
10-13 following violations:]
10-14 [(1) the corporation does not make a deposit in its
10-15 fund as required by Section 712.028;]
10-16 [(2) the corporation does not file a statement of
10-17 funds as required by Section 712.041; or]
10-18 [(3) the corporation does not pay the filing fee as
10-19 required by Section 712.042.]
10-20 [(b) The trustee of a fund shall be subject to a civil
10-21 penalty upon the occurrence of either of the following violations:]
10-22 [(1) the trustee does not file a report required by
10-23 the commissioner under Section 712.043 within 30 days after the
10-24 date of the commissioner's request; or]
10-25 [(2) the fund does not comply with this chapter.]
10-26 [(c) The civil penalty that may be imposed under Subsection
10-27 (a) or (b) shall not exceed $250 per violation for each day that
11-1 the violation persists, provided, that the aggregate civil penalty
11-2 for all violations shall not exceed $500 per day. A corporation or
11-3 trustee shall have no civil penalty liability if within 30 days
11-4 after receiving written notice from the commissioner of the
11-5 violation the corporation or trustee corrects such violation by
11-6 performing the required duty or act. Any such civil penalty may be
11-7 imposed by the commissioner after notice and opportunity for
11-8 hearing in accordance with the procedures for a contested case
11-9 hearing under the Administrative Procedure and Texas Register Act.
11-10 In determining the amount of the penalty, the commissioner shall
11-11 consider the seriousness of the violation and the good faith of the
11-12 corporation or trustee in its attempts to achieve compliance. The
11-13 amount of such penalty may be collected by the commissioner in the
11-14 same manner that money judgments are enforced in the district
11-15 courts of this state.]
11-16 SECTION 15. Subchapter C, Chapter 712, Health and Safety
11-17 Code, is amended by adding Section 712.0442 to read as follows:
11-18 Sec. 712.0442. PATTERN OF WILFUL DISREGARD. (a) If, after a
11-19 hearing conducted as provided by Chapter 2001, Government Code, the
11-20 trier of fact finds that a violation of this chapter or a rule of
11-21 the Finance Commission of Texas establishes a pattern of wilful
11-22 disregard for the requirements of this chapter or rules of the
11-23 finance commission, the trier of fact shall recommend to the
11-24 commissioner that the maximum administrative penalty permitted
11-25 under Section 712.0441 be imposed on the person committing the
11-26 violation or that the commissioner cancel or not renew the person's
11-27 permit under Chapter 154, Finance Code, if the person holds such a
12-1 permit.
12-2 (b) For the purposes of this section, violations corrected
12-3 as provided by Section 712.0441 may be included in determining
12-4 whether a pattern of wilful disregard for the requirements of this
12-5 chapter or rules of the finance commission exists.
12-6 SECTION 16. Article 21.07-1, Insurance Code, is amended by
12-7 adding Section 5B to read as follows:
12-8 Sec. 5B. INSURANCE FUNDED PREPAID FUNERAL CONTRACT SALES.
12-9 Notwithstanding any other provision of this code, a funeral home
12-10 employee or other person who has a funeral prearrangement life
12-11 insurance agent license or a license to sell life insurance not
12-12 exceeding $15,000 and who writes only life insurance policies and
12-13 fixed annuity contracts to secure the delivery of funeral services
12-14 and merchandise under prepaid funeral contracts regulated by the
12-15 Texas Department of Banking under Chapter 154, Finance Code, is not
12-16 required to comply with any continuing education requirements in
12-17 order to maintain such a license, except that the appointing
12-18 insurance company must educate its appointed agents about any new
12-19 products sold by the licensed agent to fund prepaid funeral
12-20 contracts. Such a licensee may be appointed by more than one
12-21 insurance company.
12-22 SECTION 17. (a) The changes in law made by this Act to
12-23 Subsection (d), Section 154.155, Finance Code, do not apply to
12-24 cancellation of a contract that was executed and binding on all
12-25 parties before September 1, 2001. Such a cancellation is governed
12-26 by the law in effect when the contract was executed, and the former
12-27 law is continued in effect for that purpose.
13-1 (b) The changes in law made by this Act to Section 154.252,
13-2 Finance Code, do not apply to a contract that was executed and
13-3 binding on all parties before September 1, 2001. Such a contract
13-4 is governed by the law in effect when the contract was executed,
13-5 and the former law is continued in effect for that purpose.
13-6 SECTION 18. This Act takes effect September 1, 2001.