South Carolina General Assembly
106th Session, 1985-1986

Bill 3594

                    Current Status

Bill Number:               3594
Ratification Number:       399
Act Number:                370
Introducing Body:          House
Subject:                   Relating to the Consumer Finance
                           Law
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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A370, R399, H3594)

AN ACT TO AMEND SECTION 34-29-140, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE CONSUMER FINANCE LAW, SO AS TO FURTHER PROVIDE FOR THE PROHIBITION AGAINST A LICENSEE INDUCING A PERSON TO SPLIT A LOAN IN ORDER FOR THE LICENSEE TO OBTAIN A HIGHER RATE OF INTEREST, AND TO AMEND CHAPTER 9, TITLE 37 OF THE 1976 CODE RELATING TO THE CONSUMER PROTECTION CODE BY ADDING SECTION 37-9-103 SO AS TO PROVIDE THAT CERTAIN SUBSIDIARIES OF THE SAME PARENT CORPORATION ARE NOT CONSIDERED RELATED PERSONS FOR PURPOSES OF THE REQUIREMENT THAT ALL RELATED PERSONS MAKING SUPERVISED CONSUMER LOANS MUST ELECT TO BE LICENSED UNDER THE SAME PROVISIONS OF LAW AND TO AUTHORIZE THE REVOCATION OF THE LICENSE OF THESE SUBSIDIARIES FOR ENGAGING IN OR FOR FAILING TO TAKE CERTAIN ACTIONS.

Whereas, the General Assembly has enacted laws to establish separate methods of licensing consumer finance companies so as to insure that the consuming public of South Carolina could obtain credit on reasonable terms in various dollar amounts, especially small dollar loans; and

Whereas, the General Assembly has previously concluded that persons holding a license under the provisions of Chapter 29, Title 34 of the 1976 Code and any persons related to the license holder must operate under the same operating authority to insure fair and responsible business practices so as to avoid branches or subsidiaries of related small loan companies from attempting to charge widely varying rates to the same customer; and

Whereas, the General Assembly has enacted legislation authorizing mergers between financial institutions so as to protect the competitive position of South Carolina's financial institutions in today's competitive financial environment; and

Whereas, the General Assembly hereby determines and concludes that the restrictions between related persons under Section 37-9-102 of the 1976 Code should not be applied in such a manner that would frustrate or impede mergers between financial institutions where one or more subsidiaries of these companies would be forced to either stop doing business under an existing license or to alter existing operating procedures that may have the effect of limiting the availability of small dollar loans to the citizens of South Carolina.

Be it enacted by the General Assembly of the State of South Carolina:

Splitting of loan prohibited

SECTION 1. Subsection (d) of Section 34-29-140 of the 1976 Code is amended to read:

"(d) Splitting of loan prohibited. -- No licensee shall induce or permit any person, nor any husband and wife, jointly or severally, to become obligated directly or contingently, or both, under more than one contract of loan at the same time, for the sole purpose of obtaining a higher rate of interest or greater charge than would otherwise be permitted by this chapter."

Subsidiary not considered to be related persons

SECTION 2. Chapter 9, Title 37 of the 1976 Code is amended by adding:

"Section 37-9-103. A wholly owned subsidiary of a parent corporation which subsidiary has elected to be licensed under the provisions of this chapter, and a separate wholly owned subsidiary of the same parent corporation which subsidiary has elected to be licensed under the provisions of Chapter 29 of Title 34 are not considered to be related persons for purposes of Section 37-9-102; provided, that a parent corporation with these two subsidiaries operating under different licenses, shall not permit these or any other subsidiaries to exchange, convert, transfer, or sell a license or facility from one subsidiary to another and the failure to comply with the provisions of this proviso constitutes just cause for the revocation of the license exchanged, converted, transferred, or sold; and provided further, that the failure to take reasonable steps to determine if a consumer has a current loan on the books with another subsidiary of the same parent corporation shall serve as just cause for revocation of the license of the subsidiary failing to make this determination if a pattern of such misconduct is shown."

Time effective

SECTION 3. This act shall take effect upon approval by the Governor.