AS PASSED BY HOUSE AND SENATEH.374
2000Page 1
H.374
AN ACT RELATING TO THE MODERNIZATION OF THE LAWS RELATED TO BANKS AND BANKING
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. Part 1 of Title 8 is amended to read:
PART 1. General Administrative Provisions Relating to
Banking and Insurance
CHAPTER 1. MISCELLANEOUSPOLICY AND ADMINISTRATION
§ 10. Declaration of policy
It is declared to be the policy of the state of Vermont that:
(1) the business of organizations that offer financial services and products shall be supervised by the commissioner in a manner to assure the solvency, liquidity, stability and efficiency of all such organizations, to assure reasonable and orderly competition, thereby encouraging the development, expansion and availability of financial services and products advantageous to the public welfare and to maintain close cooperation with other supervisory authorities;
(2) all such organizations shall be supervised in such a way as to protect consumers against unfair and unconscionable practices and to provide consumer education.
§ 11. Department
(a) General. The department of banking, insurance, securities, and health care administration created by section 212 of Title 3, shall have jurisdiction over and shall supervise:
(1) Financial institutions, credit unions, licensed lenders mortgage brokers, insurance companies, insurance agents, broker-dealers, investment advisors and other similar persons subject to the provisions of this title and chapters 59, 61 and 131 of Title 9.
(2) The administration of health care, including oversight of the quality and cost containment of health care provided in this state, by conducting and supervising the process of health facility certificates of need, hospital budget reviews, health care data system development and maintenance, and funding and cost containment of health care as provided in chapter 221 of Title 18.
(b) Conflicts of Interest.
(1) Neither the commissioner nor any employee of the department shall, during his or her term of office or while employed by the department, be an officer, director, organizer, employee of or attorney for any institution subject
to supervision or regulation by the department.
(2) The commissioner and employees of the department shall not, during their terms of office, receive directly or indirectly any payment or gratuity from any institution subject to supervision or regulation by the department or be engaged in the negotiation of loans for others with any such institution. The prohibitions contained in this subdivision shall not be construed as prohibiting a person from being a depositor, equity interest owner or member in any financial institution, or an insurance policyholder or equity interest owner, on the same terms as are available to the public generally.
(3) If the commissioner, or any employee of the department or the spouse of any of them or the son or daughter of any of them residing at their respective homes obtains a loan from or holds an equity interest in any financial institution subject to supervision or regulation by the department, the fact of the loan or of the holding, together with the appropriate terms and conditions, shall be disclosed immediately to the commissioner in writing by the person obtaining the loan or holding.
(4) A record of the indebtedness or holding described in subdivision (3) of this subsection shall be kept on file in the department and shall be open to inspection by the public.
(5) The commissioner shall investigate the loan or equity interest to insure that no preferential treatment has been given the department employee in the process of granting the loan or issuing the interest and that the loan or interest will not compromise the employee's effectiveness in carrying out his or her departmental duties. Where the loan has been obtained by or where the interest is held by the commissioner, the investigation shall be conducted by the state treasurer.
(c) Retention of documents. The commissioner shall keep on file for a reasonable period of time such instruments, papers and documents required by law to be filed with the commissioner.
§ 12. Commissioner
The department shall be administered by a commissioner of banking, insurance, securities, and health care administration who shall be appointed by the governor biennially, in the month of February, with the advice and consent of the senate. Commissioner, as used in this title, shall mean the commissioner of banking, insurance, securities, and health care administration.
§ 13. Powers and penalties
(a) In addition to any other penalties, and in order to enforce this title, chapter 131 of Title 9, Title 9A and Title 18, chapter 221, the commissioner may issue subpoenas, examine persons, administer oaths and require production of papers and records. Any subpoena or notice to produce may be served by registered or certified mail or in person by an agent of the commissioner. Service by registered or certified mail shall be effective three business days after mailing. Any subpoena or notice to produce shall provide at least six business days’ time from service within which to comply, except that the commissioner may shorten the time for compliance for good cause shown. Any subpoena or notice to produce sent by registered or certified mail, postage prepaid, shall constitute service on the person to whom it is addressed. Each witness who appears before the commissioner under subpoena shall receive a fee and mileage as provided for witnesses in civil cases in superior courts; provided, however, any person subject to regulation under this title shall not be eligible to receive fees or mileage under this section.
(b) A person who fails or refuses to appear, to testify or to produce papers or records for examination before the commissioner, upon properly being ordered to do so, may be assessed an administrative penalty by the commissioner of banking, insurance, securities, and health care administration of not more than $2,000.00 for each day of noncompliance and proceeded against as provided in the Administrative Procedure Act, and that person’s authority to do business may be suspended for not more than six months.
§ 14. Annual report and distribution of annualreport
(a) The commissioner shall report annually, on or before June 1, to the governor as to the conditions of persons regulated by the banking division and as to the conditions of all insurance companies chartered by or doing business in this state. The reports may be separate and shall contain statements as to the financial condition of each institution, and any other information or recommendations which the commissioner deems appropriate. The report shall also contain a review of the rules of the department, regardless of the process for adopting such rules, at a frequency such that each rule is reviewed at least every five years for efficiency and effectiveness in carrying out the policies and goals of this state relating to financial institutions, insurance mechanisms and the sale of investments.
(b) The annual report of the commissioner required by this section shall contain a listing of subsidiary and affiliate organizations formed or owned by a Vermont financial institution for the purpose of engaging in any of the powers authorized by section 14106 of this title. The report shall also contain a listing of the amount of a Vermont financial institution's loans and assets invested in such organizations.
(c) The commissioner shall cause the annual report to be published for general distribution, and shall distribute them to each member of the house commerce and senate finance committees of the general assembly, to other members of the general assembly under section 20 of Title 2 and to others as the commissioner deems appropriate. Such distribution may be effected electronically or by other similar means.
§ 15. Rules, orders and administrative interpretations
(a) In addition to other powers conferred by this title and Title 18, chapter 221, the commissioner may adopt rules and issue orders as shall be authorized by or necessary to the administration of this title and Title 18, chapter 221, and to carry out the purposes of such titles.
(b) The commissioner may, whether or not requested by any person, issue written advisory interpretations of Part 5 of this title and regulations issued under it, including interpretations of the applicability of any provision of this title and regulations issued under it. Such interpretations shall be presumed to be correct unless found to be clearly erroneous by a court of competent jurisdiction. The commissioner may make public all or a portion of an advisory interpretation.
§ 16. Judicial review
Any person aggrieved and directly affected by an order of the commissioner may appeal to the supreme court of Vermont, except as otherwise expressly provided in this title. The filing of an appeal for review or injunctive relief shall not stay enforcement of an order, but the court may order a stay on such terms as it deems proper. The court may affirm the order of the commissioner, may direct him or her to take the action withheld or may reverse or modify the order if it:
(1) was issued pursuant to unconstitutional statutory provisions;
(2) was in excess of statutory authority;
(3) was issued on unlawful procedure; or
(4) is not supported by substantial evidence in the record.
§ 17. Liability for acts
A person serving in any official capacity under this title, chapter 131 of Title 9, or chapter 221 of Title 18, including the commissioner and any officer, employee or agent of the department, shall not be liable in any civil action for damages for any act done or omitted in good faith in performing the functions of his or her office. No person may be subjected to any civil or criminal liability for any act or omission to act done in good faith in reliance on a subsisting order, regulation or rule of the commissioner, notwithstanding a subsequent decision by a court invalidating the order, regulation or rule.
§ 18. Charges for examinations, applications, reviewsand investigations
Every person subject to regulation by the department shall pay the department the reasonable costs of any examination, review or investigation that is conducted or caused to be conducted by the department of such person, or of any application or filing made by such person, at a rate to be determined by the commissioner. The department may retain experts or other persons who are independently practicing their professions to assist in such examination, review or investigation. The department shall be reimbursed for all reasonable costs and expenses, including the reasonable costs and expenses of such persons retained by the department, by the person examined, submitting the application or filing reviewed or investigated. A review subject to this section shall include, but not be limited to, a review of any application, rate filing or form filing submitted under this title. In unusual circumstances, the commissioner may waive reimbursement for the costs and expenses of any review in the interests of justice. Those institutions subject to assessment or fees for services provided under subsection 19 of this title shall not be billed for a regular examination performed under subsection 11501(a) of this title or for services for which such fees under section 19(a) of this title have been paid.
§ 19. Fees and departmental expenses
(a) The commissioner shall charge each financial institution or financial institution applicant for department services rendered. Charges for department services shall be billed as follows:
(1) New financial institution application, $5,000.00;
(2) Interim reorganization application, $1,000.00;
(3) Merger or other reorganization, $1,000.00;
(4) Conversion of a charter, $2,000.00;
(5) Establishment of a branch, $500.00;
(6) Establishment of a remote service unit, $250.00. Where more than one remote service unit performing identical services on single premises are petitioned at the same time, the total charge shall be $250.00;
(7) Relocation of main office, branch, or remote service unit, $150.00;
(8) For trust powers subsequent to the granting of the authority as financial institution, $500.00;
(9) Sale of branch, $500.00;
(10) Sale, lease or exchange of all an institution’s assets, $1,500.00;
(11) Voluntary dissolution or liquidation of an institution, $5,000.00;
(12) Establishment of a special purpose financial institution, $5,000.00;
(13) Establishment of a temporary agency, $150.00;
(14) Activity at a school, $250.00;
(15) Establishment of a loan production office, $750.00;
(16) Permit a foreign exchange activity, $500.00;
(17) Purchase or establish a subsidiary or service corporation, $2,500.00;
(18) Certificate (Good Standing), $50.00;
(19) Establish a development credit corporation, $100.00;
(20) Any other corporate organizational changes not covered above,
$250.00 plus expenses. No petition or application shall be considered by the commissioner until payment for the enumerated charge has been received.
(b) Those institutions subject to assessment under subsection (d) of this section will not be billed for examinations performed under subsection 11501(a) of this title.
(c) Each person, except as otherwise provided in subsection (d) of this section, within 30 days of notification, shall pay the department fees as prescribed by section 18 of this title, which fees shall be billed when they are incurred.
(d) Semiannually on or before February 15 and August 15, the commissioner shall apportion the expenses allowed under the title "department of banking" in the annual appropriation bill among the several financial institutions directly regulated under this title, including the operations in Vermont of any such entity organized in another jurisdiction and credit unions, after first deducting all monies received by the banking division. The commissioner shall notify each entity of the amount so apportioned to it, which shall be paid into the state treasury within 30 days after receipt of that notice.
(1) Financial institutions that accept deposits and credit unions will be assessed in proportion to the amount of their average deposits held in this state for the preceding sixmonth period ending December 31 and June 30.
(2) In the case of merchant banks established under section 12603 of this title, the assessment shall be based on assets in this state on the last day of December and June preceding.
(3) In the case of special purpose financial institutions that are not permitted to accept deposits, except merchant banks established under section 12603 of this title, and independent trust companies organized or operating under chapter 77 of this title, the assessment will be based on assets under management in this state on the last days of December and June preceding.
(e) If any entity fails to pay fees or expenses as provided in this section or section 18 of this title, within 45 days after notice from the department of the amount due, the commissioner may issue an execution against the property of the delinquent for an amount equal to 150 percent of the amount of the overdue payment. Such execution shall be enforced as an execution of a court.
(f) There is hereby created a fund to be known as the banking supervision fund for the purpose of providing the financial means for the commissioner of banking, insurance, securities, and health care administration to administer chapters 71, 73, 77, 133 and 200-210 of this title, Part 1 and Part 3 of Title 9, and Title 9A. All fees and assessments received by the department pursuant to such administration shall be deposited in this fund.
(g) All payments from the banking supervision fund for the maintenance of staff and associated expenses, including contractual services as necessary, shall be disbursed from the state treasury only upon warrants issued by the commissioner of finance and management after receipt of proper documentation regarding services rendered and expenses incurred.
(h) Any entity, subject to the assessment under subsection (d)of this section, that converts or relinquishes its state charter or closes all of its branches or offices in this state will be responsible for a pro rata share of the assessment made under subsection (d) of this section for the final period it was authorized to conduct business under this title.
§ 20. Uniform Commercial Code
(a) All commercial transactions of financial institutions doing business in this state shall be governed by and conducted in accordance with Title 9A.
(b) In any conflict between the provisions of Title 9A and any other provisions of law, including organizational documents of financial institutions, dealing with the same subject matter, Title 9A shall prevail unless otherwise specifically provided by law.
§ 21. Applicability of laws governing business
Organizations
Depending on the permitted type of organizational form, the provisions of Titles 11, 11A and 11B, relating to corporations, limited liability companies, limited liability partnerships, limited partnerships, partnerships, mutual and cooperative organizations and other organizations, shall apply to business organizations regulated under this title. In the case of a conflict and to the extent that such provisions may be inconsistent with the provisions of Titles 11, 11A and 11B, the provisions of this title shall control.
Sec. 2. Part 5 of Title 8 is added to read:
PART 5. FINANCIAL AND RELATED INSTITUTIONS
CHAPTER 200. CONSUMER PROTECTION
Subchapter 1. General Provisions
§ 10101. Application of consumer protection chapter
Except as otherwise provided in this chapter, the provisions of this chapter shall apply to all financial institutions, as defined in subdivision 11101(32) of this title, licensed lenders, mortgage brokers, sales finance companies and credit unions doing or soliciting business in this state, in addition to any other applicable consumer protection or remedy section not contained in this chapter, unless such consumer protection or remedy section is expressly made exclusive.
§ 10102. Penalties
The provisions of chapter 201, subchapter 6 of this title shall apply to any violation of this chapter, unless the section or subchapter that is the subject of the violation contains its own penalty. The procedures in chapter 201, subchapter 6 of this title shall apply to any penalty imposed for a violation of this chapter.
Subchapter 2. Financial Privacy
§ 10201. Statement of policy on financial privacy
It is the policy of this state to protect the privacy of customers of financial
institutions without unduly inhibiting the free flow of commerce or legitimate law enforcement activities.
§ 10202. Definitions
As used in this subchapter:
(1) "Account verification service" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of:
(A) assembling information on the frequency and location of depository account openings or attempted openings by a consumer, or forced closings by a depository institution of accounts of a consumer; or
(B) authenticating or validating Social Security numbers or addresses for the purpose of reporting to third parties for use in fraud prevention. Mailing such information to a customer to the address provided by such customer shall not be prohibited by this subchapter.
(2) "Credit reporting agency" means any person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of reporting to third parties on the credit rating or creditworthiness of any consumer.