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2005 Banking and Related Legislation

Each year, the Department of Banking, with the coordination of the Government Relations and Consumer Affairs Division, conducts an active legislative program.  During the 2005 session, four department proposals concerning banks, consumer credit, securities and other issues were enacted into law by the General Assembly.  

Please note that the listing is arranged by bill number.  Hyperlinks for each bill lead to the Connecticut General Assembly website.

Department of Banking Proposals

Public Act 05-39 - SB-1069
An Act Concerning Domestic and International Banking Activities

This act:

  1. expands the banking commissioner's authority to issue desist orders;
  2. eliminates certain fees associated with establishing a bank branch;
  3. grants the commissioner additional time to act on applications to establish Connecticut banks if good cause is shown;
  4. changes the notice requirements associated with organizing a bank;
  5. changes the factors that the commissioner must consider before approving a Connecticut bank's application to establish a branch;
  6. decreases the maximum aggregate amount of common stock that someone other than a parent company can control in a subsidiary holding company;
  7. changes the process for determining the amount of collateral a public depository must maintain;
  8. expands the definition of home state to include a definition for savings and loan holding companies that function in a trust or fiduciary capacity;
  9. and allows foreign banks to file a notice, instead of an application, with the banking commissioner before undertaking certain changes.

This act was a Department of Banking proposal.

Effective Date: Upon passage

Public Act 05-46 - SB-1219
An Act Concerning Consumer Credit, Check Cashing and Money Transmission

The act:

  1. prohibits fraudulent conduct and authorizes the banking commissioner to issue cease and desist orders in relation to fraudulent conduct by certain individuals or entities;
  2. provides that certain license renewal applications received after the deadline but accompanied by a fee are timely and sufficient under the law;
  3. imposes fee and approval requirements for name changes for check cashing, payment instrument, or money transmission licensees and changes the rules governing location transfer fees;
  4. requires the banking commissioner to specify the mortgage-related forms that may be used in some instances; and
  5. prohibits federal credit unions from discriminating in making certain types of loans and subjects them to existing provisions regarding pending loan applications submitted by a United States armed forces reservist or National Guard member who is called to active duty before the lender makes a decision about the application.

This act was a Department of Banking proposal.

Effective Date: October 1, 2005

Public Act 05-74 - SB-1070
An Act Making Technical Revisions to Various Statutes Relative to the Banking Law of Connecticut

This act corrects certain typos in the Connecticut General Statutes.

This act was a Department of Banking proposal.

Effective Date: Upon Passage

Public Act 05-177 - HB-6829
An Act Updating and Revising the Connecticut Uniform Securities Act

This act updates the Connecticut Uniform Securities Act and incorporates certain provisions of the Revised Uniform Securities Act (RUSA).

Some of the key provisions are:

  1. the branch office definition is being amended to conform to the model rule developed by RUSA and the New York Stock Exchange;
  2. certain enforcement powers of the commissioner related to investment advisor agents are strengthened;
  3. a number of RUSA provisions are incorporated in the Connecticut Uniform Securities Act. The minor changes deal with topics such as the commissioner's investigatory powers, maintenance of records and prohibition against false statements to the commissioner; and
  4. allows the commissioner to issue cease and desist orders and impose a fine on persons who violate the Connecticut Uniform Securities Act or a regulation under the act. The bill also provides the commissioner additional grounds for denying, suspending or revoking registrations.

The act was a Department of Banking proposal.

Effective Date:  October 1, 2005

Other Legislation

Public Act 05-23 - HB-6696
An Act Preventing Bank or Credit Union Impersonation and Misleading Advertisements

The act: 

  1. specifically prohibits the use of the names or trademarks of Connecticut banks, their affiliates, and Connecticut and federal credit unions in any commercial advertisement or solicitation in a way that might mislead consumers;
  2. requires the Banking Commissioner to enforce the prohibition; and
  3. grants banks, their affiliates, and credit unions a private cause of action for any violations. 

This legislation was proposed by the Connecticut Bankers Association. 

Effective Date: October 1, 2005

Public Act 05-27 - HB-6832
An Act Concerning the Field of Membership of a Connecticut Credit Union

The act expands the eligible membership for Connecticut's credit unions.

Under current law, a credit union's field of membership is limited to (1) a single bond membership; (2) a multiple common bond membership; or (3) individuals within a well-defined community, neighborhood or rural district.

The act provides if a credit union converts from a single or multiple common bond membership to a field of membership consisting of individuals within a certain area, it may continue to serve groups outside the defined area if those groups were within its field of membership before conversion. However, the act states that such relationships are not exclusive and other authorized Connecticut credit unions may serve those groups as well.

Finally the act prohibits the Banking Commissioner from approving an amendment to the credit union's bylaws to allow the expansion unless he makes a written determination that the probable benefits of the expansion in meeting the convenience and needs of the individuals to be served under the expansion outweighs, in the public interest, any potential harm to any other credit union.

This legislation was proposed by the Connecticut Credit Union Association. 

Effective Date: October 1, 2005

Public Act 05-28 - HB-6833
An Act Concerning Check Cashing and Wire Transfers by Credit Unions

The act allows Connecticut credit unions to provide check-cashing and wire and electronic transfer services to individuals who, because they are a member of a certain group or live in certain area served by the credit union, are eligible to become members of the credit union.

This legislation was proposed by the Connecticut Credit Union Association.

Effective Date: October 1, 2005

Public Act 05-47 - SB-1221
An Act Concerning Holiday Closing Schedules for Banks and Credit Unions and Allowing the Acceptance of Proprietary Automated Teller Machine Deposits

The act allows (1) Connecticut banks and credit unions to close the day before or after a bank and credit union holiday and (2) state banks and state or federal credit unions to limit the use of satellite automated teller machines (ATMs) and point-of-sale terminals by individuals who are not their customers.

Specifically, the act limits the permissible closings under the legislation to the day immediately before or after the holiday.

The legislation identifies by device type the transactions that, at a minimum, must be allowed at point-of-sale terminals and satellite ATMs. Lastly, it eliminates the requirement that access to non-satellite ATMs be provided for the same uses permitted for satellite ATMs.

The act was originally proposed by the Connecticut Bankers Association.

Effective Date: October 1, 2005

Public Act 05-62 - HB-6831
An Act Preventing Bank Fraud and Identity Theft

The act expands the exceptions to the general prohibition against a financial institution's disclosure of a customer's financial records without the customer's permission. The legislation allows the disclosure of a customer's information to an information network for fraud prevention that is accessed by financial institutions and law enforcement authorities exclusively to detect or protect against actual or potential fraud or unauthorized transactions.

The act also allows the disclosure of a customer's financial information to victims of identity theft pursuant to the federal Fair Credit Reporting Act.

The act was originally proposed by the Connecticut Bankers Association.

Effective Date: October 1, 2005

Public Act 05-111 - SB-617
An Act Requiring the Disclosure of Certain Information by Investment Advisers

The act requires investment advisers that must register with the Banking Department and investment adviser agents to, upon request of a client, provide their customers with a schedule of any charges, fees or penalties that might be imposed for acquiring, transferring or holding securities.

The requirement does not apply to "investment adviser representatives" as defined in federal regulations. The schedule must include any variance, advantage or economy of volume purchases that the customer or client could receive.

Effective Date: October 1, 2005

Public Act 05-139 - SB-732
An Act Concerning Disclosure of Customer Financial Records by a Financial Institution Pursuant to a Subpoena and Approval of the Plan of Conversion For a Mutual Savings Bank

The act allows financial institution customers to attempt to quash a subpoena of their financial records anytime after being served with the subpoena, instead of waiting until 10 days before the requested disclosure date.

It also allows a mutual savings bank's plan of conversion to be approved by a majority of the converting bank's corporators only if a greater percentage is not required by the bank's charter or certificate of incorporation.

Effective Date:  October 1, 2005 for provisions relating to financial records disclosures and July 1, 2005 for provisions relating to mutual savings bank conversions.

Public Act 05-148 - SB-650
An Act Requiring Consumer Credit Bureaus to Offer Security Freezes

The act (1) allows a consumer to freeze his credit report and (2) requires businesses to inform the affected consumers if there has been a security breach involving their computerized personal information.

The act prohibits a credit rating agency from releasing a frozen credit report, or any information in it, without the consumer's express authorization. It requires an agency to freeze a report in five business days. The legislation creates a means by which a consumer can release his report, permanently, temporarily, or to a specific third party. It allows credit agencies to charge a consumer up to $ 10 for each freeze or removal and up to $ 12 for a temporary removal for a specific third party.

It allows an agency to deny a request to implement a freeze, or to remove one, if in good faith it believes the request involves fraud or misrepresentation.

The act authorizes most types of businesses to deem a credit application incomplete, and an insurer to deny an application, if it finds that a consumer's credit report is frozen. It exempts certain disclosures from the freeze.

The legislation requires a business that has suffered a security breach involving personal information to disclose it to affected consumers, generally without unreasonable delay. It generally requires the notice to be given in writing, by telephone, or electronically. It allows a substitute form of notice when the cost of providing it is high or the number of affected people is large. It prescribes the form of the substitute notice.

It creates exceptions for businesses with their own security breach notification procedures if they meet the bill's timing requirements.

The act makes a violation of its security breach provisions an unfair trade practice.

Effective Date:  January 1, 2006

Public Act 05-192 - SB-1220
An Act Concerning Check Cashing Services

The act changes the laws governing check cashing services. The act:

  1. raises the maximum dollar amount of checks that may be cashed from $2,500 to $6,000, and requiring a report to the banking commissioner on checks cashed between the amounts of $2,500 to $6,000;
  2. establishes a minimum charge of $1 for check cashing services; and
  3. specifies that the check cashing services laws are inapplicable only to banks, rather than "entities" that are subject to the banking commissioner's general supervision.

Effective Date:  October 1, 2005

Public Act 05-251 - HB-6940
An Act Concerning the Budget for the Biennium Ending June 30, 2007, Deficiency Appropriations for the Fiscal Year Ending June 30, 2005, and Certain Taxes and Other Provisions Relating to Revenue

The State of Connecticut's budget for Fiscal Year 2004-05 makes some changes to the Department of Banking budget for the next year.

Section 40(a) of the act allows for up to $100,000 of the unexpended balance of funds appropriated to the Department of Banking in section 16 of Public Act 03-1 of the June 30 Special Session, as amended by Section 6 of Public Act 04-216, for Other Expenses to not lapse on June 30, 2005, and for such funds to continue to be available for implementation of a data base information system during the fiscal year ending June 30, 2006.

Section 40(b) of the act allows for up to $3,800,000 of the unexpended balance of funds appropriated to the Department of Banking in Section 16 of Public Act 03-1 of the June 30 Special Session, as amended by section 6 of Public Act 04-216, for Other Expenses to not lapse on June 30, 2006.

Effective Date:  July 1, 2005


Legislative Program Index