Florida Banking August 2023

GOVERNMENT RELATIONS

HOUSE BILL 3 TO COMBAT CORPORATE ACTIVISM IS NOW LAW

BY ANTHONY DIMARCO, FBA EXECUTIVE VICE PRESIDENT AND DIRECTOR OF GOVERNMENT AFFAIRS

H ouse Bill 3 is now law. The bill requires all Florida state-chartered banks (and credit unions) to attest that they are aware of the new law and are in compliance. Since these attestation forms were due on July 1, you should have already signed and returned them to the Office of Financial Regulation (OFR). You must sign a new attestation form under penalty of perjury every July 1. The form requires the bank to attest whether it is in compliance with the new law. The new law is intended to stop discrimination by woke financial companies. The law affects qualified public depositories (QPDs), securities firms, money services businesses, trust companies, consumer finance companies, and other financial services companies that are regulated by OFR. The bill also applies to investment companies and other financial services related companies that invest state dollars, create bond issuances, and the like. For state-chartered banks, HB 3 creates the “unsafe and unsound practice” to Chapter 655, F.S. to deny or cancel its services to a person, or to otherwise discriminate against a person, on the basis of: • The person's political opinions, speech, or affiliations; • The person's religious beliefs, exercise, or affiliations; • Any other factor that is not a quantitative, impartial, and risk-based standard; or • A social credit score. Moreover, the bill recognizes that banks must make determinations about the provision or denial of services “based on an analysis of risk factors unique to each individual customer or member.” Should a bank fail to sign the attestation, or fail to comply with the new law by discriminating, the

bank is deemed to engage in an “unsafe and unsound practice.” The OFR may then take the administrative actions available under Chapter 655. Furthermore, such a failure of compliance will subject the bank to a violation of the Florida Unfair and Deceptive Trade Practices Act (FUDTPA) with one-way attorney fees for the Attorney General should the bank lose the case. Finally, the bill prohibits OFR from using the “wild card” statute under s. 655.061, F.S. to permit a state-chartered bank to do an activity permitted by a national bank. We do not believe that the bill applies to a national bank or an out-of-state state bank. This is based upon federal preemption and other state and federal laws and regulations. Please let us know if you are approached by OFR and you are not a Florida state chartered bank. The portion of the bill dealing with qualified public depositories (QPDs) has similar language for unsafe and unsound practices, however, a violation results, in part, in losing the ability to be a QPD. The QPD attestation form is due to the Department of Financial Services (DFS) on November 30, which is the date the annual report is due. Even though the attestation form is not due until November 30, the law took effect on July 1. Therefore, all QPDs must comply with anti discriminatory portions of the new law. Please note that this law took effect nearly immediately after HB 3 was signed by the Governor. Many have questions about the law’s applicability and reach. We will keep you updated on any more information we receive or any steps the FBA takes concerning the law. As always, please reach out to us if you have any questions or comments about the new law.

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