HBA-LJP S.B. 314 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 314 By: Sibley Financial Institutions 4/17/2001 Engrossed BACKGROUND AND PURPOSE The Department of Banking (department) was created in 1923 by the 38th Legislature to oversee the safety and soundness of the financial system of Texas. The department charters, supervises, and examines statechartered banks. The department also oversees depository institutions and their affiliates, companies selling money orders and checks, foreign currency exchange and transmission businesses, perpetual care cemetery funds, and prepaid funeral contract sellers. Currently, the department is subject to the Texas Sunset Act and will be abolished on September 1, 2001, unless continued by the legislature. Senate Bill 314 provides for the continuation of the department and incorporates the recommendations of the Sunset Advisory Commission. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Finance Commission of Texas in SECTION 6 (Section 154.151, Finance Code), SECTION 8 (Section 154.252, Finance Code), and SECTION 11 (Section 712.008, Health and Safety Code) of this bill. ANALYSIS Senate Bill 314 amends the Finance Code to continue the Texas Department of Banking until September 1, 2013 and to set forth standard Sunset Advisory Commission recommendations regarding conflicts of interest, the development of an equal employment policy, standards of conduct, and the maintaining of written complaints. The bill requires the banking commissioner or banking commissioner's designee to provide to agency employees information and training on the benefits and methods of participation in the state employee incentive program (Sec. 12.113). The bill authorizes the banking commissioner to place on probation a permit holder whose permit relating to prepaid funeral services is suspended and to require the permit holder to report regularly to the Texas Department of Banking and to limit their activities as prescribed by the banking commissioner (Sec. 154.109). The bill requires the Finance Commission of Texas (commission) by rule to establish a standard disclosure that must be included in each contract to inform purchasers of the goods and services that will be provided or excluded under the contract and the circumstances under which the contract may be modified after the death of the beneficiary (Sec. 154.151). The bill provides that the purchaser of prepaid funeral benefits is entitled to receive the actual amount paid by the purchaser and half of the earnings attributable to that money (Sec. 154.155). The bill authorizes the seller of a trust-funded prepaid funeral benefits contract to retain up to one-half of all money collected or paid until the seller has received an amount equal to the lesser of the amount spent by the seller as determined and documented according to rules adopted by the commission (Sec. 154.252). The bill authorizes the banking commissioner to impose an administrative penalty on persons who engage in a pattern of violations, as determined by the banking commissioner, or who violates a rule of the commission. In determining the amount of the penalty, the bill requires the banking commissioner to consider the person's history of violations. The bill provides that the imposition of a penalty by the banking commissioner is subject to judicial review (Sec. 154.406). The bill amends the Health and Safety Code to authorize the commission to adopt rules to enforce and administer provisions relating to perpetual care cemeteries, including rules establishing fees to defray the costs of enforcement and administration (Sec. 712.008). The bill authorizes, rather than requires, the banking commissioner to examine the books and records of a corporation relating to its fund and operation of a perpetual care cemetery annually or more often as necessary to protect plot owners. The bill also removes provisions relating to the required period of time covered by the examination of the books and records of the corporation (Sec. 712.044). After a notice and opportunity for a hearing, the bill authorizes the banking commissioner to impose an administrative penalty, not to exceed $1,000 for each violation, on a person who violates certain provisions relating to perpetual care cemeteries, a final order of the banking commissioner, or a rule of the commission and does not correct the violation within a specified time period or a person who engages in a pattern of violations as determined by the banking commissioner. The bill also provides guidelines under which the banking commissioner determines the amount of the penalty (Sec. 712.0441). EFFECTIVE DATE September 1, 2001.