TITLE 7. BANKING AND SECURITIES

PART 5. OFFICE OF CONSUMER CREDIT COMMISSIONER

CHAPTER 85. PAWNSHOPS AND CRAFTED PRECIOUS METAL DEALERS

SUBCHAPTER B. RULES FOR CRAFTED PRECIOUS METAL DEALERS

DIVISION 1. REGISTRATION PROCEDURES

7 TAC §85.1011

The Finance Commission of Texas (commission) adopts amendments to §85.1011 (relating to Fees) in 7 TAC, Chapter 85, concerning Pawnshops and Crafted Precious Metal Dealers.

The commission adopts the amendments to §85.1011 without changes to the proposed text as published in the December 31, 2021, issue of the Texas Register (46 TexReg 9139). The rule will not be republished.

The rules in 7 TAC Chapter 85, Subchapter B govern crafted precious metal dealers. In general, the purpose of the rule changes to 7 TAC §85.1011 is to implement SB 1132 (2021) by adjusting annual registration fees for crafted precious metal dealers.

The OCCC distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held a stakeholder webinar regarding the rule changes. The OCCC received no informal precomments on the rule text draft.

The Texas Legislature passed SB 1132 in the 2021 legislative session. SB 1132 amended Texas Occupations Code, Chapter 1956, Subchapter B by adding new Section 1956.06131, which authorizes the OCCC to examine the places of business of crafted precious metal dealers, and requires the OCCC to examine at least 10 dealers each calendar year. SB 1132 also amended Texas Occupations Code, §1956.0612(c), to specify that the OCCC shall prescribe a registration processing fee in an amount necessary to cover the costs of administering Chapter 1956, Subchapter B. The OCCC is responsible for the costs of its operations. Under Texas Finance Code, §16.002 and §16.003, the OCCC is a self-directed, semi-independent agency, and may set fees in amounts necessary for the purpose of carrying out its functions.

The amendments to §85.1011 implement SB 1132 by adjusting annual registration fees for crafted precious metal dealers. An amendment to subsection (a) increases the annual registration fee for permanent locations from $50 to $70. An amendment to subsection (b) increases the annual registration fee for temporary locations from $25 to $40.

The OCCC believes that a $20 increase to registration fees will enable the OCCC to cover the additional costs resulting from examinations of crafted precious metal dealers, as required by SB 1132. The OCCC currently employs financial examiners who examine licensed nondepository financial institutions throughout Texas. To implement SB 1132, some of these examiners will receive training on requirements for crafted precious metal dealers, and will spend a portion of their time traveling and examining dealers. Based on its previous experience in conducting financial examinations, the OCCC anticipates that the new examinations will result in approximately $19,950 of additional costs for the first year, and approximately $11,970 of additional costs for subsequent years. Based on an average total number of crafted precious metal dealer registrations of 600, the OCCC anticipates that the $20 increase will provide $12,000 of revenue per year to cover the cost of the examination program.

The commission received no written comments on the proposal.

The rule changes are adopted under Texas Occupations Code, §1956.0611, which authorizes the commission to adopt rules to implement and enforce Texas Occupations Code, Chapter 1956, Subchapter B. In addition, Texas Occupations Code, §1956.0612(c) (as amended by SB 1132) authorizes the OCCC to prescribe a registration fee in an amount necessary to cover the costs of administering Texas Occupations Code, Chapter 1956, Subchapter B. Texas Finance Code, §16.003(c) authorizes the OCCC to set fees as necessary to carry out its functions.

The statutory provisions affected by the adoption are contained in Texas Occupations Code, Chapter 1956, Subchapter B.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on February 18, 2022.

TRD-202200596

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: March 10, 2022

Proposal publication date: December 31, 2021

For further information, please call: (512) 936-7660


CHAPTER 88. CONSUMER DEBT MANAGEMENT SERVICES

The Finance Commission of Texas (commission) adopts amendments to §88.104 (relating to Updating Application and Contact Information), §88.110 (relating to Denial, Suspension, or Revocation Based on Criminal History), §88.202 (relating to Annual Report), §88.304 (relating to Credit Counseling Standards), and §88.306 (relating to Fees for Debt Management Services), in 7 TAC, Chapter 88, concerning Consumer Debt Management Services.

The commission adopts the amendments to §§88.104, 88.110, and 88.304 without changes to the proposed text as published in the December 31, 2021, issue of the Texas Register (46 TexReg 9140). The rules will not be republished.

The commission adopts the amendments to §88.202 and §88.306 with changes to the proposed text as published in the December 31, 2021, issue of the Texas Register (46 TexReg 9140). The rules will be republished.

The rules in 7 TAC Chapter 88 govern debt management providers. In general, the purpose of the rule changes to 7 TAC Chapter 88 is to implement changes resulting from the commission's review of the chapter under Texas Government Code, §2001.039. Notice of the review of 7 TAC Chapter 88 was published in the Texas Register on October 1, 2021 (46 TexReg 6547). The commission received no comments in response to that notice.

The OCCC distributed an early precomment draft of proposed changes to interested stakeholders for review, and then held a stakeholder webinar regarding the rule changes. The OCCC received no informal precomments on the rule text draft.

Amendments to §88.104 add a new subsection (b) specifying that debt management registrants must provide certain updated information within 30 calendar days after the registrant has knowledge of a change in the information. The information includes the name or operating name of the registrant, location of any offices, websites, names of principal parties, and criminal history. Current subsection (b) already provides that registrants are responsible for ensuring that all contact information on file with the OCCC is current and correct, but the current rule does not provide a deadline for providing updated contact information. The new subsection specifies a 30-day deadline for providing update information, similar to other OCCC rules that contain a 30-day deadline for licensees to provide updated contact information. The OCCC requires current and correct information about registrants in order to carry out its responsibilities under Texas Finance Code, Chapter 394.

Amendments to §88.110 relate to the OCCC's review of the criminal history of a debt management applicant or registrant. The OCCC is authorized to review criminal history of debt management applicants and registrants under Texas Occupations Code, Chapter 53; Texas Finance Code, §14.109 and §394.204; and Texas Government Code, §411.095. The amendments to §88.110 ensure consistency with HB 1342, which the Texas Legislature enacted in 2019. HB 1342 included the following changes in Texas Occupations Code, Chapter 53: (1) the bill repealed a provision that generally allowed denial, suspension, or revocation for any offense occurring in the five years preceding the application, (2) the bill added provisions requiring an agency to consider correlation between elements of a crime and the duties and responsibilities of the licensed occupation, as well as compliance with conditions of community supervision, parole, or mandatory supervision, and (3) the bill removed previous language specifying who could provide a letter of recommendation on behalf of an applicant. Amendments throughout subsections (c) and (f) of §88.110 implement these statutory changes from HB 1342. Other amendments to §88.110 include technical corrections, clarifying changes, and updates to citations.

Amendments to §88.202 specify information that debt management registrants must submit with annual reports. Amendments throughout §88.202 add descriptions of information that registrants must provide annually under Texas Finance Code, §394.205 and §394.206, and add citations to these statutory provisions. These amendments are intended to help registrants comply with reporting requirements by clearly identifying information required by the statute. The amendments remove current §88.202(b)(2), which requires a registrant to provide a list of all owners and principal parties with the annual report. The OCCC anticipates that this list will no longer be necessary based on the amendments to §88.104 described earlier in this adoption, and believes that removing this list will simplify the reporting process. New §88.202(d) specifies that the annual report must be verified by oath or affirmation, as required by Texas Finance Code, §394.205(c), and requires registrants to certify that they have reviewed contact information and submitted any updates in accordance with the OCCC's instructions.

Since the proposal, changes have been made in §88.202(b) to further simplify reporting of information about consumer counseling. Under Texas Finance Code, §394.208(a)(1), before enrolling a consumer in a debt management plan, a provider must provide individualized counseling and educational information to the consumer. Currently, §88.202(b)(3) requires providers to include information about credit counseling with the annual report, including the number of credit counselors employed and the name of the accreditation organization. The adoption removes this provision and replaces it with new §88.202(b)(4), requiring the provider to state whether it has provided individualized counseling to each consumer. Combined with the amendment to §88.304(b) described in the following paragraph, this change will simplify annual reporting requirements relating to credit counseling, while maintaining the requirement to provide this information to the OCCC upon request.

An amendment to §88.304(b) removes language that currently requires providers to submit documentation of the certification of the provider's credit counselors with the annual report. The OCCC believes that removing this requirement will simplify the reporting process. The amendments maintain current language requiring a provider to provide this information upon request by the OCCC. The amendments also replace "commissioner" with "OCCC" in this subsection to ensure consistency with other rules.

Amendments to §88.306 add citations to statutory limitations on fees for debt management services. Currently, this section states that a provider may not charge for services unrelated to debt management or financial education unless approved by the commissioner. Under Texas Finance Code, §394.210(a), a debt management provider may not charge any fees other than fees that are authorized by Texas Finance Code, §394.210. New §88.306(a) includes a reference to this statutory section and explains that providers may not impose a fee or other charge except as authorized by the statute. The amendments remove the phrase "unless approved by the commissioner in advance" from the current rule, because fees for services unrelated to debt management or financial education are not authorized by Texas Finance Code, §394.210. Although the commissioner may authorize certain counseling and education fees under Texas Finance Code, §394.210(d), this does not include fees for unrelated services. New §88.603(c) explains that the OCCC will periodically compute and publish adjustments to debt management fees, as provided by Texas Finance Code, §394.2101.

Since the proposal, a change has been made in §88.306(c) to specify the base year for purposes of the fee adjustments described in the previous paragraph. Under Texas Finance Code, §394.2101(a), the OCCC is authorized to adopt a base year for purposes of adjustments to debt management fees. The Texas Legislature added this language in 2011 (under SB 141). For this reason, new language in §88.306(c) explains that the OCCC has adopted 2011 as a base year for purposes of these adjustments.

SUBCHAPTER A. REGISTRATION PROCEDURES

7 TAC §88.104, §88.110

The rule changes are adopted under Texas Finance Code, §394.214(a), which authorizes the commission to adopt rules to carry out Texas Finance Code, Chapter 394, Subchapter C.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 394.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on February 18, 2022.

TRD-202200597

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: March 10, 2022

Proposal publication date: December 31, 2021

For further information, please call: (512) 936-7660


SUBCHAPTER B. ANNUAL REQUIREMENTS

7 TAC §88.202

The rule changes are adopted under Texas Finance Code, §394.214(a), which authorizes the commission to adopt rules to carry out Texas Finance Code, Chapter 394, Subchapter C.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 394.

§88.202.Annual Report.

(a) General requirement. Each authorized debt management services provider must file an annual report under this section and must comply with all instructions from the OCCC relating to submitting the report.

(b) Annual report. Each year, at the time of annual renewal, an authorized debt management services provider must file with the OCCC, in a form prescribed by the OCCC, a report that contains the following:

(1) if the provider is a nonprofit or tax exempt organization, the assets and liabilities at the beginning and end of the reporting period, as required by Texas Finance Code, §394.205(b)(1);

(2) the total number of debt management plans the provider has initiated on behalf of consumers in Texas during the reporting period, as required by Texas Finance Code, §394.205(b)(2);

(3) the total and average fees charged to consumers, including all voluntary contributions received from consumers, as required by Texas Finance Code, §394.205(b)(3); and

(4) if the provider has initiated one or more debt management plans during the reporting period, a statement of whether the provider provided individualized counseling to each consumer through the services of an independently certified counselor, as required by Texas Finance Code, §394.208(a)(1).

(c) Required documents. A provider must submit the following additional documents with the annual report, in accordance with the OCCC's instructions:

(1) a blank copy of any debt management services agreement used by the provider, as required by Texas Finance Code, §394.205(d) (the OCCC may allow a provider to certify current use of a previously submitted agreement);

(2) blank copies of the provider's consumer educational information, individualized financial analysis, initial debt management plan, and any other required disclosures relating to credit counseling, as required by Texas Finance Code, §394.205(d) (the OCCC may allow a provider to certify current use of previously submitted information); and

(3) a copy of the provider's surety bond or a compliant insurance policy, as required by Texas Finance Code, §394.206(a).

(d) Certification. An annual report must be verified by the oath or affirmation of the owner, manager, president, chief executive officer, or chairman of the board of directors of the provider, as required by Texas Finance Code, §394.205(c). The provider must certify that the provider has reviewed all contact information and principal party information on file with the OCCC, and has submitted any updates to this information in accordance with the OCCC's instructions.

(e) Other information. Upon request by the OCCC, the provider must provide any other information the commissioner deems relevant concerning the provider's business and operations during the preceding calendar year.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on February 18, 2022.

TRD-202200598

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: March 10, 2022

Proposal publication date: December 31, 2021

For further information, please call: (512) 936-7660


SUBCHAPTER C. OPERATIONAL REQUIREMENTS

7 TAC §88.304, §88.306

The rule changes are adopted under Texas Finance Code, §394.214(a), which authorizes the commission to adopt rules to carry out Texas Finance Code, Chapter 394, Subchapter C.

The statutory provisions affected by the adoption are contained in Texas Finance Code, Chapter 394.

§88.306.Fees for Debt Management Services.

(a) Limitation on fees. The maximum fees for debt management services are described by Texas Finance Code, §394.210. A provider may not impose a fee or other charge, or receive payment from a consumer or other person on behalf of a consumer, except as allowed under Texas Finance Code, §394.210.

(b) Fees for unrelated services. A provider may not charge a consumer for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt management services or educational services concerning personal finance.

(c) Adjustment of fee amounts. As provided by Texas Finance Code §394.2101, the OCCC will periodically compute and publish dollar amounts of fees specified in Texas Finance Code, §394.210, to reflect inflation as measured by the Consumer Price Index for All Urban Consumers. These adjustments will be published on the OCCC's website. For purposes of these adjustments, the OCCC has adopted 2011 as a base year.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on February 18, 2022.

TRD-202200600

Matthew Nance

Deputy General Counsel

Office of Consumer Credit Commissioner

Effective date: March 10, 2022

Proposal publication date: December 31, 2021

For further information, please call: (512) 936-7660