1-1     By:  Sibley                                            S.B. No. 314
 1-2           (In the Senate - Filed March 7, 2001; March 8, 2001, read
 1-3     first time and referred to Committee on Business and Commerce;
 1-4     March 26, 2001, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 7, Nays 0; March 26, 2001,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 314                   By:  Sibley
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the continuation and functions of the Texas Department
1-11     of Banking and the regulation of certain financial institutions and
1-12     businesses; providing an administrative penalty.
1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14           SECTION 1.  Section 12.107, Finance Code, is amended to read
1-15     as follows:
1-16           Sec. 12.107.  CONFLICT OF INTEREST.  (a)  In this section,
1-17     "Texas trade association" means a cooperative and voluntarily
1-18     joined association of business or professional competitors in this
1-19     state that:
1-20                 (1)  is primarily designed to assist its members and
1-21     its industry or profession in dealing with mutual business or
1-22     professional problems and in promoting their common interests; and
1-23                 (2)  includes business and professional competitors
1-24     located in this state among its members.
1-25           (b)  A person may not be a department employee if:
1-26                 (1)  the person is an officer, employee, or paid
1-27     consultant of a Texas trade association in an industry regulated by
1-28     the department; or
1-29                 (2)  the person's spouse is an officer, manager, or
1-30     paid consultant of a Texas trade association in an industry
1-31     regulated by the department.
1-32           (c)  A person may not act as the general counsel to the
1-33     department if the person is required to register as a lobbyist
1-34     under Chapter 305, Government Code, because of the person's
1-35     activities for compensation on behalf of a profession related to
1-36     the operation of the department [An officer or employee of the
1-37     department may not be:]
1-38                 [(1)  an officer, employee, or paid consultant of a
1-39     trade association in an industry regulated by the department; or]
1-40                 [(2)  related within the second degree by affinity or
1-41     consanguinity, as determined under Chapter 573, Government Code, to
1-42     a person who is an officer, employee, or paid consultant of a trade
1-43     association in an industry regulated by the department].
1-44           (d) [(b)]  Before the 11th day after the date on which an
1-45     employee begins employment with the department, the employee shall
1-46     read the conflict-of-interest statutes applicable to employees of
1-47     the department and sign a notarized affidavit stating that the
1-48     employee has read those statutes.
1-49           SECTION 2.  Section 12.108, Finance Code, is amended to read
1-50     as follows:
1-51           Sec. 12.108.  CONSUMER INFORMATION AND COMPLAINTS.  (a)  The
1-52     banking commissioner shall:
1-53                 (1)  prepare information of consumer interest
1-54     describing:
1-55                       (A)  the regulatory functions of the department;
1-56     and
1-57                       (B)  the department's procedures by which
1-58     consumer complaints are filed with and resolved by the department;
1-59     and
1-60                 (2)  make the information available to the public and
1-61     appropriate state agencies.
1-62           (b)  The department shall maintain a file on each written
1-63     complaint filed with the department.  The file must include:
1-64                 (1)  the name of the person who filed the complaint;
 2-1                 (2)  the date the complaint is received by the
 2-2     department;
 2-3                 (3)  the subject matter of the complaint;
 2-4                 (4)  the name of each person contacted in relation to
 2-5     the complaint;
 2-6                 (5)  a summary of the results of the review or
 2-7     investigation of the complaint; and
 2-8                 (6)  an explanation of the reason the file was closed.
 2-9           (c)  The department shall provide to the person filing the
2-10     complaint and to each person who is a subject of the complaint a
2-11     written summary of the department's policies and procedures
2-12     relating to complaint investigation and resolution [banking
2-13     commissioner shall keep an information file about each complaint
2-14     filed with the commissioner relating to an entity regulated by the
2-15     department.]
2-16           [(c)  At least quarterly until final disposition of any
2-17     written complaint filed with the banking commissioner relating to
2-18     an entity regulated by the department, the commissioner shall
2-19     notify the parties to the complaint of the status of the complaint
2-20     unless the notice would jeopardize an undercover investigation].
2-21           SECTION 3.  Section 12.109, Finance Code, is amended to read
2-22     as follows:
2-23           Sec. 12.109.  SUNSET PROVISION.  The office of banking
2-24     commissioner is subject to Chapter 325, Government Code (Texas
2-25     Sunset Act).  Unless continued in existence as provided by that
2-26     chapter, the office is abolished September 1, 2013 [2001].
2-27           SECTION 4.  Subchapter B, Chapter 12, Finance Code, is
2-28     amended by adding Sections 12.111, 12.112, and 12.113 to read as
2-29     follows:
2-30           Sec. 12.111.  STANDARDS OF CONDUCT.  The banking commissioner
2-31     or the banking commissioner's designee shall provide to agency
2-32     employees, as often as necessary, information regarding the
2-33     requirements for office or employment under this chapter, including
2-34     information regarding a person's responsibilities under applicable
2-35     laws relating to standards of conduct for state officers or
2-36     employees.
2-37           Sec. 12.112.  EQUAL EMPLOYMENT OPPORTUNITY POLICY.  (a)  The
2-38     banking commissioner or the banking commissioner's designee shall
2-39     prepare and maintain a written policy statement that implements a
2-40     program of equal employment opportunity to ensure that all
2-41     personnel decisions are made without regard to race, color,
2-42     disability, sex, religion, age, or national origin.
2-43           (b)  The policy statement must include:
2-44                 (1)  personnel policies, including policies relating to
2-45     recruitment, evaluation, selection, training, and promotion of
2-46     personnel, that show the intent of the department to avoid the
2-47     unlawful employment practices described by Chapter 21, Labor Code;
2-48     and
2-49                 (2)  an analysis of the extent to which the composition
2-50     of the department's personnel is in accordance with state and
2-51     federal law and a description of reasonable methods to achieve
2-52     compliance with state and federal law.
2-53           (c)  The policy statement must:
2-54                 (1)  be updated annually;
2-55                 (2)  be reviewed by the state Commission on Human
2-56     Rights for compliance with Subsection (b)(1); and
2-57                 (3)  be filed with the governor's office.
2-58           Sec. 12.113.  EMPLOYEE INCENTIVE PROGRAM.  The banking
2-59     commissioner or the banking commissioner's designee shall provide
2-60     to agency employees information and training on the benefits and
2-61     methods of participation in the state employee incentive program.
2-62           SECTION 5.  Section 154.109, Finance Code, is amended by
2-63     adding Subsection (d) to read as follows:
2-64           (d)  The commissioner may place on probation a permit holder
2-65     whose permit is suspended.  If a permit suspension is probated, the
2-66     commissioner may require the permit holder:
2-67                 (1)  to report regularly to the department on matters
2-68     that are the basis of the probation; or
2-69                 (2)  to limit its activities as prescribed by the
 3-1     commissioner.
 3-2           SECTION 6.  Section 154.151, Finance Code, is amended by
 3-3     adding Subsections (d) and (e) to read as follows:
 3-4           (d)  A sales contract for prepaid funeral benefits, whether
 3-5     in English or Spanish, must be written in plain language designed
 3-6     to be easily understood by the average consumer.  The contract must
 3-7     be printed in an easily readable font and type size.  The
 3-8     department shall provide model contracts complying with this
 3-9     subsection and shall enforce this subsection.
3-10           (e)  The Finance Commission of Texas by rule shall establish
3-11     a standard disclosure that must be included in each contract to
3-12     inform purchasers of the goods and services that will be provided
3-13     or excluded under the contract and the circumstances under which
3-14     the contract may be modified after death of the beneficiary.
3-15           SECTION 7.  Subsection (d), Section 154.155, Finance Code, is
3-16     amended to read as follows:
3-17           (d)  The purchaser is entitled to receive [only] the actual
3-18     amount paid by the purchaser and half of all earnings attributable
3-19     to that money, less the amount permitted to be retained as provided
3-20     by Section 154.252, except as provided by Subsection (e) and by
3-21     Section [Sections] 154.205 [and 154.254].
3-22           SECTION 8.  Section 154.252, Finance Code, is amended to read
3-23     as follows:
3-24           Sec. 154.252.  RETENTION OF MONEY FOR EXPENSES.  The [To
3-25     cover its selling expenses, service costs, and general overhead,
3-26     the] seller of a trust-funded prepaid funeral benefits contract may
3-27     retain for the seller's use and benefit an amount not to exceed
3-28     one-half of all money collected or paid until the seller has
3-29     received an amount equal to the lesser of:
3-30                 (1)  the amount spent by the seller on selling
3-31     expenses, service costs, and general overhead, as determined and
3-32     documented according to rules adopted by the Finance Commission of
3-33     Texas; or
3-34                 (2)  10 percent of the total amount the purchaser
3-35     agreed to pay under the contract.
3-36           SECTION 9.  Section 154.406, Finance Code, is amended to read
3-37     as follows:
3-38           Sec. 154.406.  ADMINISTRATIVE PENALTY.  (a)  After notice and
3-39     opportunity for hearing, the commissioner may impose an
3-40     administrative penalty on a person who:
3-41                 (1)  violates this chapter or a final order of the
3-42     commissioner or rule of the Finance Commission of Texas
3-43     [commissioner or department;] and
3-44                 [(2)]  does not correct the violation before the 31st
3-45     day after the date the person receives written notice of the
3-46     violation from the department; or
3-47                 (2)  engages in a pattern of violations, as determined
3-48     by the commissioner, including violations corrected as provided by
3-49     Subdivision (1).
3-50           (b)  The amount of the penalty for each violation may not
3-51     exceed $1,000 for each day the violation occurs.
3-52           (c)  In determining the amount of the penalty, the
3-53     commissioner shall consider the seriousness of the violation, the
3-54     person's history of violations, including violations corrected as
3-55     provided by Subsection (a)(1), and the person's good faith in
3-56     attempting to comply with this chapter.
3-57           (d)  The imposition of a penalty under this section is
3-58     subject to judicial review as a contested case under Chapter 2001,
3-59     Government Code.
3-60           (e)  The commissioner may collect the penalty in the same
3-61     manner that a money judgment is enforced in district court.
3-62           SECTION 10.  Subsection (b), Section 345.003, Finance Code,
3-63     is amended to read as follows:
3-64           (b)  "Services" includes work or labor described by
3-65     Subsection (a) and that is:
3-66                 (1)  a medical or dental service; or
3-67                 (2)  [a prepaid funeral benefit regulated under Chapter
3-68     154; and]
3-69                 [(3)]  a maintenance or service contract or warranty.
 4-1           SECTION 11.  Subchapter A, Chapter 712, Health and Safety
 4-2     Code, is amended by adding Section 712.008 to read as follows:
 4-3           Sec. 712.008.  RULES.  The Finance Commission of Texas may
 4-4     adopt rules to enforce and administer this chapter, including rules
 4-5     establishing fees to defray the costs of enforcing and
 4-6     administering this chapter.
 4-7           SECTION 12.  Section 712.042, Health and Safety Code, is
 4-8     amended to read as follows:
 4-9           Sec. 712.042.  FEES.  On filing a statement of funds under
4-10     Section 712.041, a corporation shall pay the commissioner a
4-11     reasonable and necessary fee set by rule adopted by the Finance
4-12     Commission of Texas under Section 712.008 [annually by the
4-13     commissioner] to defray the cost of administering this chapter.
4-14           SECTION 13.  Section 712.044, Health and Safety Code, is
4-15     amended by amending the section heading and Subsection (a) to read
4-16     as follows:
4-17           Sec. 712.044.  EXAMINATION OF [FUND] RECORDS; EXAMINATION
4-18     FEES AND EXPENSES.  (a)  The commissioner may examine the books and
4-19     records of a corporation relating to its fund and the operation of
4-20     the cemetery [shall be examined] annually or more [as] often as
4-21     necessary to protect the interest of plot owners [by the
4-22     commissioner.  The examination shall cover the period of time from
4-23     the date of the last examination of the corporation's books and
4-24     records relating to its fund].
4-25           SECTION 14.  Subsections (a), (b), and (c), Section 712.0441,
4-26     Health and Safety Code, are amended to read as follows:
4-27           (a)  After notice and opportunity for hearing, the
4-28     commissioner may impose an administrative penalty on a person who:
4-29                 (1)  violates this chapter or a final order of the
4-30     commissioner or rule of the Finance Commission of Texas and does
4-31     not correct the violation before the 31st day after the date the
4-32     person receives written notice of the violation from the banking
4-33     department; or
4-34                 (2)  engages in a pattern of violations, as determined
4-35     by the commissioner, including violations corrected as provided by
4-36     this section.
4-37           (b)  The amount of the penalty for each violation may not
4-38     exceed $1,000 for each day the violation occurs.
4-39           (c)  In determining the amount of the penalty, the
4-40     commissioner shall consider the seriousness of the violation, the
4-41     person's history of violations, including violations corrected as
4-42     provided by this section, and the person's good faith in attempting
4-43     to comply with this chapter.  The imposition of a penalty under
4-44     this section is subject to judicial review as a contested case
4-45     under Chapter 2001, Government Code.  The commissioner may collect
4-46     the penalty in the same manner that a money judgment is enforced in
4-47     district court.  [A corporation shall be subject to a civil penalty
4-48     upon the occurrence of any of the following violations:]
4-49                 [(1)  the corporation does not make a deposit in its
4-50     fund as required by Section 712.028;]
4-51                 [(2)  the corporation does not file a statement of
4-52     funds as required by Section 712.041; or]
4-53                 [(3)  the corporation does not pay the filing fee as
4-54     required by Section 712.042.]
4-55           [(b)  The trustee of a fund shall be subject to a civil
4-56     penalty upon the occurrence of either of the following violations:]
4-57                 [(1)  the trustee does not file a report required by
4-58     the commissioner under Section 712.043 within 30 days after the
4-59     date of the commissioner's request; or]
4-60                 [(2)  the fund does not comply with this chapter.]
4-61           [(c)  The civil penalty that may be imposed under Subsection
4-62     (a) or (b) shall not exceed $250 per violation for each day that
4-63     the violation persists, provided, that the aggregate civil penalty
4-64     for all violations shall not exceed $500 per day.  A corporation or
4-65     trustee shall have no civil penalty liability if within 30 days
4-66     after receiving written notice from the commissioner of the
4-67     violation the corporation or trustee corrects such violation by
4-68     performing the required duty or act.  Any such civil penalty may be
4-69     imposed by the commissioner after notice and opportunity for
 5-1     hearing in accordance with the procedures for a contested case
 5-2     hearing under the Administrative Procedure and Texas Register Act.
 5-3     In determining the amount of the penalty, the commissioner shall
 5-4     consider the seriousness of the violation and the good faith of the
 5-5     corporation or trustee in its attempts to achieve compliance.  The
 5-6     amount of such penalty may be collected by the commissioner in the
 5-7     same manner that money judgments are enforced in the district
 5-8     courts of this state.]
 5-9           SECTION 15.  This Act takes effect September 1, 2001.
5-10                                  * * * * *