| 2 | 4 | | |
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| 3 | 5 | | |
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| 4 | 6 | | A BILL TO BE ENTITLED |
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| 5 | 7 | | AN ACT |
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| 6 | 8 | | relating to limitations on the termination of banking services by |
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| 7 | 9 | | certain financial institutions. |
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| 8 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 11 | | SECTION 1. Title 12, Business & Commerce Code, is amended by |
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| 10 | 12 | | adding Chapter 601A to read as follows: |
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| 11 | 13 | | CHAPTER 601A. LIMITATION ON TERMINATION OF BANKING SERVICES BY |
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| 12 | 14 | | FINANCIAL INSTITUTIONS |
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| 13 | 15 | | Sec. 601A.001. DEFINITIONS. In this chapter: |
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| 14 | 16 | | (1) "Department" means the Texas Department of |
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| 15 | 17 | | Banking. |
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| 16 | 18 | | (2) "Financial institution" means: |
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| 17 | 19 | | (A) a bank chartered under state law, including |
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| 18 | 20 | | Chapter 32, Finance Code; |
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| 19 | 21 | | (B) a savings and loan association chartered |
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| 20 | 22 | | under Chapter 62, Finance Code; |
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| 21 | 23 | | (C) a state savings bank chartered under Chapter |
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| 22 | 24 | | 92, Finance Code; |
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| 23 | 25 | | (D) a credit union chartered under Chapter 122, |
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| 24 | 26 | | Finance Code; or |
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| 25 | 27 | | (E) a trust company chartered under the laws of |
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| 26 | 28 | | this state. |
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| 27 | 29 | | Sec. 601A.002. APPLICABILITY. This chapter applies only to |
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| 28 | 30 | | a financial institution or other lender that: |
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| 29 | 31 | | (1) is formed or chartered under the laws of this |
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| 30 | 32 | | state; and |
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| 31 | 33 | | (2) makes loans or other extensions of credit only to |
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| 32 | 34 | | customers: |
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| 33 | 35 | | (A) who are residents of this state; or |
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| 34 | 36 | | (B) that are businesses organized under the laws |
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| 35 | 37 | | of this state. |
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| 36 | 38 | | Sec. 601A.003. NOTICE REQUIRED TO TERMINATE SERVICES. (a) |
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| 37 | 39 | | A financial institution may not terminate a bank account, line of |
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| 38 | 40 | | credit, or other banking instrument of a customer without: |
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| 39 | 41 | | (1) providing notice to the customer and a reason for |
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| 40 | 42 | | the termination; and |
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| 41 | 43 | | (2) subject to Subsection (c), allowing a reasonable |
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| 42 | 44 | | period of at least 30 days after the date of the notice required by |
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| 43 | 45 | | Subdivision (1), for a customer to voluntarily transfer accounts. |
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| 44 | 46 | | (b) A financial institution may not terminate a bank |
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| 45 | 47 | | account, line of credit, or other banking instrument if a customer |
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| 46 | 48 | | has filed a timely appeal as described by Section 601A.004(b). |
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| 47 | 49 | | (c) Subsection (a)(2) does not apply if: |
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| 48 | 50 | | (1) the bank account, line of credit, or other banking |
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| 49 | 51 | | instrument is dormant or has a zero balance; |
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| 50 | 52 | | (2) the bank account has had persistent overdrafts or |
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| 51 | 53 | | is habitually delinquent in payments; or |
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| 52 | 54 | | (3) the financial institution has reason to believe |
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| 53 | 55 | | that the customer is engaged in criminal activity. |
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| 54 | 56 | | Sec. 601A.004. REMEDIES. (a) A customer who receives a |
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| 55 | 57 | | notification that the customer's bank account, line of credit, or |
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| 56 | 58 | | other banking instrument will be terminated may file an appeal with |
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| 57 | 59 | | the department. |
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| 58 | 60 | | (b) An appeal is considered timely if filed not later than |
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| 59 | 61 | | the 10th business day after the date of notice for termination of |
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| 60 | 62 | | services described by Section 601A.003(a)(1). |
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| 61 | 63 | | (c) The department shall review all termination of service |
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| 62 | 64 | | appeals for compliance. The department shall direct a financial |
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| 63 | 65 | | institution to reverse the termination if the department determines |
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| 64 | 66 | | that the termination is not authorized. |
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| 65 | 67 | | (d) A customer may bring an action under this section |
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| 66 | 68 | | against a financial institution only after a determination by the |
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| 67 | 69 | | department. |
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| 68 | 70 | | (e) If the customer proves that a financial institution |
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| 69 | 71 | | violated this chapter, the customer is entitled to recover: |
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| 70 | 72 | | (1) declaratory relief under Chapter 37, Civil |
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| 71 | 73 | | Practice and Remedies Code, including costs and reasonable |
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| 72 | 74 | | attorney's fees under Section 37.009, Civil Practice and Remedies |
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| 73 | 75 | | Code; and |
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| 74 | 76 | | (2) injunctive relief. |
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| 75 | 77 | | Sec. 601A.005. RULEMAKING AUTHORITY. The Finance |
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| 76 | 78 | | Commission of Texas shall adopt rules to enforce this chapter. |
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| 77 | 79 | | Sec. 601A.006. LIMITATION ON EFFECT OF CHAPTER. This |
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| 78 | 80 | | chapter does not subject a financial institution to damages or |
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| 79 | 81 | | other legal remedies to the extent the financial institution is |
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| 80 | 82 | | protected from those remedies under federal law. |
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| 81 | 83 | | SECTION 2. This Act takes effect September 1, 2025. |
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