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A BILL TO BE ENTITLED
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AN ACT
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relating to limitations on the termination of banking services by |
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certain financial institutions. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 12, Business & Commerce Code, is amended by |
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adding Chapter 601A to read as follows: |
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CHAPTER 601A. LIMITATION ON TERMINATION OF BANKING SERVICES BY |
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FINANCIAL INSTITUTIONS |
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Sec. 601A.001. DEFINITIONS. In this chapter: |
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(1) "Department" means the Texas Department of |
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Banking. |
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(2) "Financial institution" means: |
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(A) a bank chartered under state law, including |
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Chapter 32, Finance Code; |
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(B) a savings and loan association chartered |
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under Chapter 62, Finance Code; |
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(C) a state savings bank chartered under Chapter |
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92, Finance Code; |
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(D) a credit union chartered under Chapter 122, |
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Finance Code; or |
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(E) a trust company chartered under the laws of |
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this state. |
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Sec. 601A.002. APPLICABILITY. This chapter applies only to |
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a financial institution or other lender that: |
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(1) is formed or chartered under the laws of this |
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state; and |
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(2) makes loans or other extensions of credit only to |
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customers: |
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(A) who are residents of this state; or |
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(B) that are businesses organized under the laws |
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of this state. |
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Sec. 601A.003. NOTICE REQUIRED TO TERMINATE SERVICES. (a) |
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A financial institution may not terminate a bank account, line of |
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credit, or other banking instrument of a customer without: |
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(1) providing notice to the customer and a reason for |
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the termination; and |
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(2) subject to Subsection (c), allowing a reasonable |
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period of at least 30 days after the date of the notice required by |
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Subdivision (1), for a customer to voluntarily transfer accounts. |
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(b) A financial institution may not terminate a bank |
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account, line of credit, or other banking instrument if a customer |
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has filed a timely appeal as described by Section 601A.004(b). |
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(c) Subsection (a)(2) does not apply if: |
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(1) the bank account, line of credit, or other banking |
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instrument is dormant or has a zero balance; |
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(2) the bank account has had persistent overdrafts or |
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is habitually delinquent in payments; or |
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(3) the financial institution has reason to believe |
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that the customer is engaged in criminal activity. |
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Sec. 601A.004. REMEDIES. (a) A customer who receives a |
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notification that the customer's bank account, line of credit, or |
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other banking instrument will be terminated may file an appeal with |
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the department. |
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(b) An appeal is considered timely if filed not later than |
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the 10th business day after the date of notice for termination of |
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services described by Section 601A.003(a)(1). |
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(c) The department shall review all termination of service |
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appeals for compliance. The department shall direct a financial |
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institution to reverse the termination if the department determines |
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that the termination is not authorized. |
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(d) A customer may bring an action under this section |
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against a financial institution only after a determination by the |
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department. |
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(e) If the customer proves that a financial institution |
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violated this chapter, the customer is entitled to recover: |
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(1) declaratory relief under Chapter 37, Civil |
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Practice and Remedies Code, including costs and reasonable |
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attorney's fees under Section 37.009, Civil Practice and Remedies |
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Code; and |
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(2) injunctive relief. |
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Sec. 601A.005. RULEMAKING AUTHORITY. The Finance |
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Commission of Texas shall adopt rules to enforce this chapter. |
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Sec. 601A.006. LIMITATION ON EFFECT OF CHAPTER. This |
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chapter does not subject a financial institution to damages or |
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other legal remedies to the extent the financial institution is |
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protected from those remedies under federal law. |
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SECTION 2. This Act takes effect September 1, 2025. |