Public Act 90-0041 of the 90th General Assembly
Public Act 90-0041
HB0586 Enrolled LRB9002584JSfg
AN ACT authorizing and regulating the sale of insurance
by financial institutions.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Banking Act is amended by
changing Sections 5 and 48.2 as follows:
(205 ILCS 5/5) (from Ch. 17, par. 311)
Sec. 5. General corporate powers. A bank organized
under this Act or subject hereto shall be a body corporate
and politic and shall, without specific mention thereof in
the charter, have all the powers conferred by this Act and
the following additional general corporate powers:
(1) To sue and be sued, complain, and defend in its
corporate name.
(2) To have a corporate seal, which may be altered at
pleasure, and to use the same by causing it or a facsimile
thereof to be impressed or affixed or in any manner
reproduced, provided that the affixing of a corporate seal to
an instrument shall not give the instrument additional force
or effect, or change the construction thereof, and the use of
a corporate seal is not mandatory.
(3) To make, alter, amend, and repeal bylaws, not
inconsistent with its charter or with law, for the
administration of the affairs of the bank.
(4) To elect or appoint and remove officers and agents
of the bank and define their duties and fix their
compensation.
(5) To adopt and operate reasonable bonus plans,
profit-sharing plans, stock-bonus plans, stock-option plans,
pension plans and similar incentive plans for its directors,
officers and employees.
(5.1) To manage, operate and administer a fund for the
investment of funds by a public agency or agencies, including
any unit of local government or school district, or any
person. The fund for a public agency shall invest in the
same type of investments and be subject to the same
limitations provided for the investment of public funds. The
fund for public agencies shall maintain a separate ledger
showing the amount of investment for each public agency in
the fund. "Public funds" and "public agency" as used in this
Section shall have the meanings ascribed to them in Section 1
of the Public Funds Investment Act.
(6) To make reasonable donations for the public welfare
or for charitable, scientific, religious or educational
purposes.
(7) To borrow or incur an obligation; and to pledge its
assets:
(a) to secure its borrowings, its lease of personal
or real property or its other nondeposit obligations;
(b) to enable it to act as agent for the sale of
obligations of the United States;
(c) to secure deposits of public money of the
United States, whenever required by the laws of the
United States, including without being limited to,
revenues and funds the deposit of which is subject to the
control or regulation of the United States or any of its
officers, agents, or employees and Postal Savings funds;
(d) to secure deposits of public money of any state
or of any political corporation or subdivision thereof
including, without being limited to, revenues and funds
the deposit of which is subject to the control or
regulation of any state or of any political corporation
or subdivisions thereof or of any of their officers,
agents, or employees;
(e) to secure deposits of money whenever required
by the National Bankruptcy Act;
(f) to qualify under Section 2-9 of the Corporate
Fiduciary Act; and
(g) to secure trust funds commingled with the
bank's funds, whether deposited by the bank or an
affiliate of the bank, pursuant to Section 2-8 of the
Corporate Fiduciary Act.
(8) To own, possess, and carry as assets all or part of
the real estate necessary in or with which to do its banking
business, either directly or indirectly through the ownership
of all or part of the capital stock, shares or interests in
any corporation, association, trust engaged in holding any
part or parts or all of the bank premises, engaged in such
business and in conducting a safe deposit business in the
premises or part of them, or engaged in any activity that the
bank is permitted to conduct in a subsidiary pursuant to
paragraph (12) of this Section 5.
(9) To own, possess, and carry as assets other real
estate to which it may obtain title in the collection of its
debts or that was formerly used as a part of the bank
premises, but title to any real estate except as herein
permitted shall not be retained by the bank, either directly
or by or through a subsidiary, as permitted by subsection
(12) of this Section for a total period of more than 5 years
after acquiring title, either directly or indirectly, unless
a request for extension of time shall have been submitted in
writing to and approved by the Commissioner.
(10) To do any act, including the acquisition of stock,
necessary to obtain insurance of its deposits, or part
thereof, and any act necessary to obtain a guaranty, in whole
or in part, of any of its loans or investments by the United
States or any agency thereof, and any act necessary to sell
or otherwise dispose of any of its loans or investments to
the United States or any agency thereof, and to acquire and
hold membership in the Federal Reserve System.
(11) Notwithstanding any other provisions of this Act,
to do any act and to own, possess, and carry as assets
property of the character, including stock, that is at the
time authorized or permitted to national banks by an Act of
Congress, but subject always to the same limitations and
restrictions as are applicable to national banks by the
pertinent federal law.
(12) To own, possess, and carry as assets stock of one
or more corporations that is, or are, engaged in one or more
of the following businesses:
(a) holding title to and administering assets
acquired as a result of the collection or liquidating of
loans, investments, or discounts; or
(b) holding title to and administering personal
property acquired by the bank, directly or indirectly
through a subsidiary, for the purpose of leasing to
others, provided the lease or leases and the investment
of the bank, directly or through a subsidiary, in that
personal property otherwise comply with Section 35.1 of
this Act; or
(c) carrying on or administering any of the
activities excepting the receipt of deposits or the
payment of checks or other orders for the payment of
money in which a bank may engage in carrying on its
general banking business; provided, however, that nothing
contained in this paragraph (c) shall be deemed to permit
a bank organized under this Act or subject hereto to do,
either directly or indirectly through any subsidiary, any
act, including the making of any loan or investment, or
to own, possess, or carry as assets any property that if
done by or owned, possessed, or carried by the State bank
would be in violation of or prohibited by any provision
of this Act.
The provisions of this subsection (12) shall not apply to
and shall not be deemed to limit the powers of a State bank
with respect to the ownership, possession, and carrying of
stock that a State bank is permitted to own, possess, or
carry under this Act.
Any bank intending to establish a subsidiary under this
subsection (12) shall give written notice to the Commissioner
60 days prior to the subsidiary's commencing of business or,
as the case may be, prior to acquiring stock in a corporation
that has already commenced business. The Commissioner may
specify the form of the notice and may promulgate rules and
regulations to administer this subsection (12).
(13) To accept for payment at a future date not
exceeding one year from the date of acceptance, drafts drawn
upon it by its customers; and to issue, advise, or confirm
letters of credit authorizing the holders thereof to draw
drafts upon it or its correspondents.
(14) To own and lease personal property acquired by the
bank at the request of a prospective lessee and upon the
agreement of that person to lease the personal property
provided that the lease, the agreement with respect thereto,
and the amount of the investment of the bank in the property
comply with Section 35.1 of this Act.
(15) (a) To establish and maintain, in addition to the
main banking premises, branches offering any banking services
permitted at the main banking premises of a State bank.
(b) To establish and maintain, after May 31, 1997,
branches in another state that may conduct any activity in
that state that is authorized or permitted for any bank that
has a banking charter issued by that state, subject to the
same limitations and restrictions that are applicable to
banks chartered by that state.
(16) (Blank).
(17) To establish and maintain terminals, as authorized
by the Electronic Fund Transfer Act.
(18) To establish and maintain temporary service booths
at any International Fair held in this State which is
approved by the United States Department of Commerce, for the
duration of the international fair for the sole purpose of
providing a convenient place for foreign trade customers at
the fair to exchange their home countries' currency into
United States currency or the converse. This power shall not
be construed as establishing a new place or change of
location for the bank providing the service booth.
(19) To indemnify its officers, directors, employees,
and agents, as authorized for corporations under Section 8.75
of the Business Corporation Act of 1983.
(20) To own, possess, and carry as assets stock of, or
be or become a member of, any corporation, mutual company,
association, trust, or other entity formed exclusively for
the purpose of providing directors' and officers' liability
and bankers' blanket bond insurance or reinsurance to and for
the benefit of the stockholders, members, or beneficiaries,
or their assets or businesses, or their officers, directors,
employees, or agents, and not to or for the benefit of any
other person or entity or the public generally.
(21) To make debt or equity investments in corporations
or projects, whether for profit or not for profit, designed
to promote the development of the community and its welfare,
provided that the aggregate investment in all of these
corporations and in all of these projects does not exceed 5%
of the unimpaired capital and unimpaired surplus of the bank
and provided that this limitation shall not apply to
creditworthy loans by the bank to those corporations or
projects. Upon written application to the Commissioner, a
bank may make an investment that would, when aggregated with
all other such investments, exceed 5% of the unimpaired
capital and unimpaired surplus of the bank. The Commissioner
may approve the investment if he is of the opinion and finds
that the proposed investment will not have a material adverse
effect on the safety and soundness of the bank.
(22) To own, possess, and carry as assets the stock of a
corporation engaged in the ownership or operation of a travel
agency or to operate a travel agency as a part of its
business, provided that the bank either owned, possessed, and
carried as assets the stock of such a corporation or operated
a travel agency as part of its business before July 1, 1991.
(23) With respect to affiliate facilities:
(a) to conduct at affiliate facilities any of the
following transactions for and on behalf of another
commonly owned bank, if so authorized by the other bank:
receiving deposits; cashing and issuing checks, drafts,
and money orders; changing money; and receiving payments
on existing indebtedness; and
(b) to authorize a commonly owned bank to conduct
for and on behalf of it any of the transactions listed in
this paragraph (23) at one or more affiliate facilities.
Any bank intending to conduct or to authorize a commonly
owned bank to conduct at an affiliate facility any of the
transactions specified in this paragraph (23) shall give
written notice to the Commissioner at least 30 days before
any such transaction is conducted at the affiliate facility.
(24) To act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and may receive for services
so rendered such fees or commissions as may be agreed upon
between the said bank and the insurance company for which it
may act as agent; provided, however, that no such bank shall
in any case assume or guarantee the payment of any premium on
insurance policies issued through its agency by its
principal; and provided further, that the bank shall not
guarantee the truth of any statement made by an assured in
filing his application for insurance.
(Source: P.A. 88-4; 89-208, eff. 9-29-95; 89-310, eff.
1-1-96; 89-364, eff. 8-18-95; 89-626, eff. 8-9-96.)
(205 ILCS 5/48.2) (from Ch. 17, par. 360.1)
Sec. 48.2. Prohibition against certain activities. (a)
Any bank, subsidiary, affiliate, officer or employee of such
bank subject to this Act shall not:
(1) grant any loan on the prior condition, agreement or
understanding that the borrower contract with any specific
person or organization for the following:
(A) insurance services of an agent or broker;
(B) legal services rendered to the borrower;
(C) services of a real estate agent or broker; or
(D) real estate or property management services;
(2) require that insurance services, legal services,
real estate services or property management services be
placed with any subsidiary, affiliate, officer or employee of
any bank.
(b) Any bank or subsidiary, affiliate, employee,
officer, banking house, branch bank, branch office,
additional office or agency of such bank that is transacting
an insurance business in this State shall comply with Article
XLIV Section 499.1 of the "Illinois Insurance Code".
(c) Any officer or employee of a bank or its affiliates
or subsidiaries who violates this Section is guilty of a
business offense, and upon conviction shall be fined not more
than $1,000. This Section does not create a private cause of
action for civil damages.
(d) In any contract or loan which is secured by a
mortgage, deed of trust, or conveyance in the nature of a
mortgage, on residential real estate, the interest which is
computed, calculated, charged, or collected pursuant to such
contract or loan, or pursuant to any regulation or rule
promulgated pursuant to this Act, may not be computed,
calculated, charged or collected for any period of time
occurring after the date on which the total indebtedness,
with the exception of late payment penalties, is paid in
full. For purposes of this subsection (d) of this Section
48.2, a prepayment shall mean the payment of the total
indebtedness, with the exception of late payment penalties if
incurred or charged, on any date before the date specified in
the contract or loan agreement on which the total
indebtedness shall be paid in full, or before the date on
which all payments, if timely made, shall have been made. In
the event of a prepayment of the indebtedness which is made
on a date after the date on which interest on the
indebtedness was last computed, calculated, charged, or
collected but before the next date on which interest on the
indebtedness was to be calculated, computed, charged, or
collected, the lender may calculate, charge and collect
interest on the indebtedness for the period which elapsed
between the date on which the prepayment is made and the date
on which interest on the indebtedness was last computed,
calculated, charged or collected at a rate equal to 1/360 of
the annual rate for each day which so elapsed, which rate
shall be applied to the indebtedness outstanding as of the
date of prepayment. The lender shall refund to the borrower
any interest charged or collected which exceeds that which
the lender may charge or collect pursuant to the preceding
sentence. The provisions of this amendatory Act of 1985
shall apply only to contracts or loans entered into on or
after January 1, 1986.
(e) Any bank, affiliate or subsidiary of such bank which
shall engage in making residential mortgage financing
transactions, shall with respect to each such transaction,
provide the following:
(1) if a contractual obligation is intended to a
borrower, a mortgage commitment which shall set forth the
material terms, conditions and contingencies of such
commitment;
(2) if the servicing of a residential mortgage shall be
transferred from the original mortgagee, within 45 days of
such transfer, written notice sent by certified mail, return
receipt requested, to the mortgagor at the address of the
property, unless the mortgagor shall have directed
correspondence from the mortgagee shall be sent to another
address, which notice shall set forth: the name and address
of the transferee; the name, address and telephone number to
which inquiries by the residential mortgagor should be
addressed; and the name and address to which the next 3
monthly installments are to be submitted to the transferee
and the amount of each of such monthly installment; and
(3) if the servicing of a residential mortgage shall be
transferred again or if the information in paragraph (2)
above shall change, the notice with the corrected information
shall be provided within 45 days of such subsequent transfer
or change in information by the transferee of the servicing
of the mortgage at that time.
(Source: P.A. 85-1209; 85-1379.)
Section 10. The Illinois Savings and Loan Act of 1985 is
amended by changing Section 1-6 as follows:
(205 ILCS 105/1-6) (from Ch. 17, par. 3301-6)
Sec. 1-6. General corporate powers. An association
operating under this Act shall be a body corporate and
politic and shall have all of the specific powers conferred
by this Act and, in addition thereto, the following general
powers:
(a) To sue and be sued, complain and defend in its
corporate name, and to have a common seal, which it may alter
or renew at pleasure;
(b) To obtain and maintain insurance of the
association's withdrawable capital by an insurance
corporation as defined in this Act;
(c) Notwithstanding anything to the contrary contained
in this Act, to become a member of the Federal Home Loan
Bank, and to have all of the powers granted to a savings or
thrift institution organized under the laws of the United
States and which is located and doing business in the State
of Illinois, subject to regulations of the Commissioner;
(d) To act as a fiscal agent for the United States, the
State of Illinois or any department, branch, arm or agency of
the State or any unit of local government or school district
in the State when duly designated for that purpose, and as
agent to perform the reasonable functions as may be required
of it;
(e) To become a member of or deal with any corporation
or agency of the United States or the State of Illinois, to
the extent that the agency assists in furthering or
facilitating the association's purposes or powers and to that
end to purchase stock or securities thereof or deposit money
therewith, and to comply with any other conditions of
membership or credit;
(f) To make donations in reasonable amounts for the
public welfare or for charitable, scientific, religious or
educational purposes;
(g) To adopt and operate reasonable insurance, bonus,
profit sharing, and retirement plans for officers and
employees; likewise, directors who are not officers,
including, but not limited to, advisory, honorary, and
emeritus directors, may participate in those plans;
(h) To reject any application for membership, to retire
withdrawable capital by enforced retirement as provided in
this Act and the by-laws, and to limit the issuance of or
payments on withdrawable capital, subject, however, to
contractual obligations;
(i) To purchase stock in service corporations and to
invest in any form of indebtedness of any service corporation
as defined in this Act, subject to regulations of the
Commissioner;
(j) To purchase stock of a corporation whose principal
purpose is to operate a safe deposit company or escrow
service company;
(k) To act as Trustee or Custodian under the Federal
Self-Employed Individuals' Tax Retirement Act of 1962 or any
amendments thereto or any other retirement account and invest
any funds held in such capacity in a savings account of the
institution;
(l) (Blank);
(m) To establish, maintain and operate terminals as
authorized by the Electronic Fund Transfer Act and by Section
5 of the Illinois Banking Act. The establishment,
maintenance, operation and location of such terminals shall
be subject to the approval of the Commissioner;
(n) Subject to the approval and regulations of the
Commissioner, an association may purchase or assume all or
any part of the assets or liabilities of an eligible insured
bank;
(o) To purchase from a bank, as defined in Section 2 of
the Illinois Banking Act, an insubstantial portion of the
total deposits of an insured bank. For the purpose of this
subparagraph, "insubstantial portion of the total deposits"
shall have the same meaning as provided in Section 5(d)(2)(D)
of the Federal Deposit Insurance Act;
(p) To effect an acquisition of or conversion to another
financial institution pursuant to Section 205 of the
Financial Institutions Reform, Recovery and Enforcement Act
of 1989;
(q) To pledge its assets:
(1) to enable it to act as an agent for the sale of
obligations of the United States;
(2) to secure deposits;
(3) to secure deposits of money whenever required
by the National Bankruptcy Act;
(4) to qualify under Section 2-9 of the Corporate
Fiduciary Act; and
(5) to secure trust funds commingled with the
institution's funds, whether deposited by the institution
or an affiliate of the institution, as required under
Section 2-8 of the Corporate Fiduciary Act; and
(r) To provide temporary periodic service to persons
residing in a bona fide nursing home, senior citizens'
retirement home, or long-term care facility; and
(s) To purchase for its own account shares of stock of a
bankers' bank, described in Section 13(b)(1) of the Illinois
Banking Act, on the same terms and conditions as a bank may
purchase such shares. In no event shall the total amount of
such stock held by an association in such bankers' bank
exceed 10% of its capital and surplus (including undivided
profits) and in no event shall an association acquire more
than 5% of any class of voting securities of such bankers'
bank;.
(t) (s) To effect a conversion to a State bank pursuant
to the provisions of the Illinois Banking Act; and.
(u) Subject to Article XLIV of the Illinois Insurance
Code, to act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and may receive for services
so rendered such fees or commissions as may be agreed upon
between the said association and the insurance company for
which it may act as agent; provided, however, that no such
association shall in any case assume or guarantee the payment
of any premium on insurance policies issued through its
agency by its principal; and provided further, that the
association shall not guarantee the truth of any statement
made by an assured in filing his application for insurance.
(Source: P.A. 88-481; 89-74, eff. 6-30-95; 89-310, eff.
1-1-96; 89-317, eff. 8-11-95; 89-355, eff. 8-17-95; 89-567,
eff. 7-26-96; 89-603, eff. 8-2-96; 89-626, eff. 8-9-96;
revised 9-13-96.)
Section 15. The Savings Bank Act is amended by changing
Section 1008 as follows:
(205 ILCS 205/1008) (from Ch. 17, par. 7301-8)
Sec. 1008. General corporate powers.
(a) A savings bank operating under this Act shall be a
body corporate and politic and shall have all of the specific
powers conferred by this Act and in addition thereto, the
following general powers:
(1) To sue and be sued, complain, and defend in its
corporate name and to have a common seal, which it may
alter or renew at pleasure.
(2) To obtain and maintain insurance by a deposit
insurance corporation as defined in this Act.
(3) To act as a fiscal agent for the United States,
the State of Illinois or any department, branch, arm, or
agency of the State or any unit of local government or
school district in the State, when duly designated for
that purpose, and as agent to perform reasonable
functions as may be required of it.
(4) To become a member of or deal with any
corporation or agency of the United States or the State
of Illinois, to the extent that the agency assists in
furthering or facilitating its purposes or powers and to
that end to purchase stock or securities thereof or
deposit money therewith, and to comply with any other
conditions of membership or credit.
(5) To make donations in reasonable amounts for the
public welfare or for charitable, scientific, religious,
or educational purposes.
(6) To adopt and operate reasonable insurance,
bonus, profit sharing, and retirement plans for officers
and employees and for directors including, but not
limited to, advisory, honorary, and emeritus directors,
who are not officers or employees.
(7) To reject any application for membership; to
retire deposit accounts by enforced retirement as
provided in this Act and the bylaws; and to limit the
issuance of, or payments on, deposit accounts, subject,
however, to contractual obligations.
(8) To purchase stock in service corporations and
to invest in any form of indebtedness of any service
corporation as defined in this Act, subject to
regulations of the Commissioner.
(9) To purchase stock of a corporation whose
principal purpose is to operate a safe deposit company or
escrow service company.
(10) To exercise all the powers necessary to
qualify as a trustee or custodian under federal or State
law, provided that the authority to accept and execute
trusts is subject to the provisions of the Corporate
Fiduciary Act and to the supervision of those activities
by the Commissioner of Banks and Real Estate.
(11) (Blank).
(12) To establish, maintain, and operate terminals
as authorized by the Electronic Fund Transfer Act. The
establishment, maintenance, operation, and location of
those terminals shall be subject to the approval of the
Commissioner.
(13) Pledge its assets:
(A) to enable it to act as agent for the sale
of obligations of the United States;
(B) to secure deposits;
(C) to secure deposits of money whenever
required by the National Bankruptcy Act;
(D) to qualify under Section 2-9 of the
Corporate Fiduciary Act; and
(E) to secure trust funds commingled with the
savings bank's funds, whether deposited by the
savings bank or an affiliate of the savings bank, as
required under Section 2-8 of the Corporate
Fiduciary Act.
(14) To accept for payment at a future date not to
exceed one year from the date of acceptance, drafts drawn
upon it by its customers; and to issue, advise, or
confirm letters of credit authorizing holders thereof to
draw drafts upon it or its correspondents.
(15) Subject to the regulations of the
Commissioner, to own and lease personal property acquired
by the savings bank at the request of a prospective
lessee and, upon the agreement of that person, to lease
the personal property.
(16) To establish temporary service booths at any
International Fair in this State that is approved by the
United States Department of Commerce for the duration of
the international fair for the purpose of providing a
convenient place for foreign trade customers to exchange
their home countries' currency into United States
currency or the converse. To provide temporary periodic
service to persons residing in a bona fide nursing home,
senior citizens' retirement home, or long-term care
facility. These powers shall not be construed as
establishing a new place or change of location for the
savings bank providing the service booth.
(17) To indemnify its officers, directors,
employees, and agents, as authorized for corporations
under Section 8.75 of the Business Corporations Act of
1983.
(18) To provide data processing services to others
on a for-profit basis.
(19) To utilize any electronic technology to
provide customers with home banking services.
(20) Subject to the regulations of the
Commissioner, to enter into an agreement to act as a
surety.
(21) Subject to the regulations of the
Commissioner, to issue credit cards, extend credit
therewith, and otherwise engage in or participate in
credit card operations.
(22) To purchase for its own account shares of
stock of a bankers' bank, described in Section 13(b)(1)
of the Illinois Banking Act, on the same terms and
conditions as a bank may purchase such shares. In no
event shall the total amount of such stock held by a
savings bank an association in such bankers' bank exceed
10% of its capital and surplus (including undivided
profits) and in no event shall a savings bank an
association acquire more than 5% of any class of voting
securities of such bankers' bank.
(23) Subject to Article XLIV of the Illinois
Insurance Code, to act as the agent for any fire, life,
or other insurance company authorized by the State of
Illinois, by soliciting and selling insurance and
collecting premiums on policies issued by such company;
and may receive for services so rendered such fees or
commissions as may be agreed upon between the said
savings bank and the insurance company for which it may
act as agent; provided, however, that no such savings
bank shall in any case assume or guarantee the payment of
any premium on insurance policies issued through its
agency by its principal; and provided further, that the
savings bank shall not guarantee the truth of any
statement made by an assured in filing his application
for insurance.
(b) If this Act fails to provide specific guidance in
matters of corporate governance, the provisions of the
Business Corporation Act of 1983 may be used.
(Source: P.A. 88-112; 88-481; 88-670, eff. 12-2-94; 89-74,
eff. 6-30-95; 89-310, eff. 1-1-96; 89-317, eff. 8-11-95;
89-355, eff. 8-17-95; 89-508, eff. 7-3-96; 89-603, eff.
8-2-96; 89-626, eff. 8-9-96; revised 9-9-96.)
Section 20. The Illinois Credit Union Act is amended by
changing Sections 13 and 55 as follows:
(205 ILCS 305/13) (from Ch. 17, par. 4414)
Sec. 13. General Powers. A credit union may:
(1) Make contracts; sue and be sued; adopt and use a
common seal and alter same;
(2) Acquire, lease (either as lessee or lessor), hold,
pledge, mortgage, sell and dispose of real property, either
in whole or in part, or any interest therein, as may be
necessary or is incidental to its present or future
operations and needs subject to such limitations as may be
imposed thereon in rules and regulations promulgated by the
Director; acquire, lease (either as lessee or lessor), hold,
pledge, mortgage, sell and dispose or personal property,
either in whole or in part, or any interest therein, as may
be necessary or is incidental to its present or future
operations and needs;
(3) At the discretion of the Board of Directors, require
the payment of an entrance fee or annual membership fee, or
both, of any person admitted to membership;
(4) Receive savings from its members in the form of
shares of various classes, or special purpose share accounts;
act as custodian of its members' accounts; issue shares in
trust as provided in this Act;
(5) Lend its funds to its members and otherwise as
hereinafter provided;
(6) Borrow from any source in accordance with policy
established by the Board of Directors to a maximum of 50% of
capital, surplus and reserves;
(7) Discount and sell any obligations owed to the credit
union;
(8) Honor requests for withdrawals or transfers of all
or any part of member share accounts, and any classes
thereof, in any manner approved by the credit union Board of
Directors;
(9) Sell all or substantially all of its assets or
purchase all or substantially all of the assets of another
credit union, subject to the prior approval of the Director;
(10) Invest surplus funds as provided in this Act;
(11) Make deposits in banks, savings banks, savings and
loan associations, trust companies; and invest in shares,
classes of shares or share certificates of other credit
unions;
(12) Assess charges and fees to members in accordance
with board resolution;
(13) Hold membership in and pay dues to associations and
organizations; to invest in shares, stocks or obligations of
any credit union organization;
(14) Declare dividends and pay interest refunds to
borrowers as provided in this Act;
(15) Collect, receive and disburse monies in connection
with providing negotiable checks, money orders and other
money-type instruments, and for such other purposes as may
provide benefit or convenience to its members, and charge a
reasonable fee for such services;
(16) Act as fiscal agent for and receive deposits from
the federal government, this state or any agency or political
subdivision thereof;
(17) Receive savings from nonmembers in the form of
shares or share accounts in the case of credit unions serving
predominantly low-income members. The term "low income
members" shall mean those members whose annual income falls
at or below the lower level standard of living classification
as established by the Bureau of Labor Statistics and updated
by the Employment and Training Administration of the U.S.
Department of Labor. The term "predominantly" is defined as a
simple majority; and
(18) To establish, maintain, and operate terminals as
authorized by the Electronic Fund Transfer Act; and
(19) Subject to Article XLIV of the Illinois Insurance
Code, to act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and may receive for services
so rendered such fees or commissions as may be agreed upon
between the said credit union and the insurance company for
which it may act as agent; provided, however, that no such
credit union shall in any case assume or guarantee the
payment of any premium on insurance policies issued through
its agency by its principal; and provided further, that the
credit union shall not guarantee the truth of any statement
made by an assured in filing his application for insurance.
(Source: P.A. 88-235; 89-310, eff. 1-1-96.)
(205 ILCS 305/55) (from Ch. 17, par. 4456)
Sec. 55. Insurance for Members. (1) A credit union may
purchase or make available insurance for its members.
(2) A credit union may enter into cooperative marketing
arrangements to facilitate its members' voluntary purchase of
insurance including, but not by way of limitation, life
insurance, disability insurance, accident and health
insurance, property insurance, liability insurance and legal
expense insurance.
Nothing in this Act shall be construed to allow credit
unions to engage in the retail sale of insurance to their
members.
(Source: P.A. 81-329.)
Section 25. The Corporate Fiduciary Act is amended by
changing Section 1-6 as follows:
(205 ILCS 620/1-6) (from Ch. 17, par. 1551-6)
Sec. 1-6. General Corporate Powers. A corporate
fiduciary shall have the powers:
(a) if it is a State bank, those powers granted under
Sections 3 and 5 of the Illinois Banking Act, as now or
hereafter amended; and
(b) if it is a State savings and loan association, those
powers granted under Sections 1-6 through 1-8 of the Illinois
Savings and Loan Act of 1985, as now or hereafter amended;
and
(c) if it is a corporation organized under the Business
Corporation Act of 1983, as now or hereafter amended, those
powers granted in Sections 4.01 through 4.24 of the Trusts
and Trustees Act, as now or hereafter amended, to the extent
the exercise of such powers by the corporate fiduciary are
not contrary to the instrument containing the appointment of
the corporate fiduciary, the court order appointing the
corporate fiduciary or any other statute specifically
limiting the power of the corporate fiduciary under the
circumstances; and
(d) subject to Article XLIV of the Illinois Insurance
Code, to act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and may receive for services
so rendered such fees or commissions as may be agreed upon
between the said corporate fiduciary and the insurance
company for which it may act as agent; provided, however,
that no such corporate fiduciary shall in any case assume or
guarantee the payment of any premium on insurance policies
issued through its agency by its principal; and provided
further, that the corporate fiduciary shall not guarantee the
truth of any statement made by an assured in filing his
application for insurance.
The Commissioner may specify powers of corporate
fiduciaries generally or of a particular corporate fiduciary
and by rule or order limit or restrict such powers of
corporate fiduciaries or a particular corporate fiduciary if
he finds the exercise of such power by corporate fiduciaries
generally or of the corporate fiduciary in particular may
tend to be an unsafe or unsound practice, or if such power is
otherwise not in the interest of beneficiaries of any
fiduciary appointment.
(Source: P.A. 86-754.)
Section 30. The Illinois Insurance Code is amended by
changing Section 499.1 and adding Article XLIV as follows:
(215 ILCS 5/499.1) (from Ch. 73, par. 1065.46-1)
Sec. 499.1. Registered firms.
(a) Any corporation or partnership transacting insurance
business as an insurance agency shall register with the
Director before transacting insurance business in this State.
Such registration shall remain in effect as long as the firm
pays the annual fee required by Section 509.1 of this Code by
the date due, unless the registration is revoked or suspended
pursuant to Section 505.1 of this Code.
(b) Each firm required to register before acting as a
registered firm pursuant to this Article shall appoint one or
more licensed insurance producers who are officers,
directors, or partners in the firm to be responsible for the
firm's compliance with the insurance laws and Title 50 of the
Illinois Administrative Code. Such individual or individuals
shall submit to the Director a registration form and the fees
required by Section 509.1. The Director shall prescribe the
registration form and may require any documents reasonably
necessary to verify the information contained in the
registration form. Within 30 days of a change in officers,
directors, or partners who are appointed to be responsible
for the firm's compliance with the insurance laws and Title
50 of the Illinois Administrative Code, the firm shall report
the change to the Department.
(c) The registered firm shall inform the Director in
writing of a change in its business address within 30 days of
such change.
(d) Each registered firm shall disclose its members,
officers or directors who are authorized to act as insurance
producers, and report any changes in such personnel to the
Director within 30 days of such changes.
(e) (Blank). A registered firm may not be a national
bank located in a city, village or incorporated town with a
population exceeding 5,000 according to the last federal
census, a State bank or a trust company, or a subsidiary,
affiliate, officer or employee of any such national or State
bank or trust company contributing directly or indirectly to
the income of such bank or trust company any profit or fees
or part thereof derived from the solicitation, negotiation or
effecting of insurance.
(Source: P.A. 89-240, eff. 1-1-96.)
(215 ILCS 5/Art. XLIV heading new)
Article XLIV. FINANCIAL INSTITUTIONS
INSURANCE SALES LAW
(215 ILCS 5/1400 new)
Sec. 1400. Title. This Article may be cited as the
Financial Institutions Insurance Sales Law.
(215 ILCS 5/1401 new)
Sec. 1401. Purpose. The purpose of this Article is to
increase the availability of insurance products to the
citizens of this State by expanding those businesses
authorized to sell insurance products to include financial
institutions, and to protect the interests of the citizens of
this State by regulating their authority to do so. This
Article does not apply to activities or services conducted in
this State by or for a financial institution that do not
require licensure as an insurance producer, temporary
insurance producer, limited insurance representative, or
registered firm.
(215 ILCS 5/1402 new)
Sec. 1402. Definitions. For the purposes of this
Article:
"Financial institution" means:
(1) a State bank, a national bank, or an
out-of-state bank, as those terms are defined in the
Illinois Banking Act, or any subsidiary of a State bank,
a national bank, or an out-of-state bank;
(2) a foreign banking corporation, as that term is
defined in the Foreign Banking Office Act, or any
subsidiary of a foreign banking corporation;
(3) a corporate fiduciary, as that term is defined
in the Corporate Fiduciary Act;
(4) a savings bank organized under the Savings Bank
Act, an out-of-state savings bank chartered under the
laws of a state other than Illinois, a territory of the
United States, or the District of Columbia, or a federal
savings bank organized under federal law, or any
subsidiary of a savings bank, an out-of-state savings
bank or a federal savings bank;
(5) an association or federal association, as those
terms are defined in the Illinois Savings and Loan Act of
1985, or any subsidiary of an association or federal
association;
(6) an out-of-state savings and loan association
chartered under the laws of a state other than Illinois,
a territory of the United States or the District of
Columbia, or a federal savings and loan association
organized under federal law whose principal business
office is located outside of Illinois, or any subsidiary
of an out-of-state savings and loan association or
federal savings and loan association whose principal
business office is located outside of Illinois; or
(7) a credit union as defined in the Illinois Credit
Union Act, or any subsidiary of a credit union.
To the extent that any entity other than a financial
institution conducts insurance activities in this State on
behalf of or on the premises of the financial institution,
such entity shall be subject to this Article for the purposes
of those activities.
"Insurance" means all lines of insurance defined and
regulated as insurance under this Code, but for the purposes
of this Article, "insurance" shall not include the following
lines of insurance, provided that this paragraph shall not be
deemed to preclude or otherwise limit regulation of the
following lines of insurance pursuant to and to the extent
otherwise provided by any other insurance law of this State:
(1) credit life, credit accident and health, credit
involuntary unemployment, credit casualty and credit
property insurance;
(2) extended service contracts and warranty
agreements;
(3) insurance obtained by the debtor to provide
payment for the difference between the remaining balance
on a loan or other extension of credit and the amount of
insurance coverage on the collateral securing the loan or
other extension of credit;
(4) insurance placed by a financial institution on
collateral used in connection with a loan or other
extension of credit when a debtor breaches the
contractual obligation to provide that insurance;
(5) title insurance regulated by the Title Insurance
Act; and
(6) private mortgage insurance and financial
guarantee insurance.
(215 ILCS 5/1403 new)
Sec. 1403. Licensure requirements for financial
institutions.
(a) A financial institution transacting insurance
business in this State shall register with the Director
pursuant to the Illinois Insurance Code and shall be subject
to the laws, rules, and penalties of the Illinois Insurance
Code.
(b) The solicitation and sale of insurance by a financial
institution shall be conducted only by individuals who have
been issued and maintain an insurance producer's license
pursuant to the Illinois Insurance Code and shall be subject
to the laws, rules, and penalties of the Illinois Insurance
Code.
(c) For the purposes of this Section, a "financial
institution" means the subsidiary of a financial institution
when the financial institution is transacting insurance
business in this State only through the subsidiary. For the
purposes of Section 499.1 of the Illinois Insurance Code, a
financial institution shall be deemed to be a corporation.
(215 ILCS 5/1404 new)
Sec. 1404. Subsidiaries or divisions. A financial
institution shall not qualify for registration as a
registered firm under Section 499.1 of this Code unless: (1)
it establishes a separate subsidiary that acts as the
registered firm or (2) it is otherwise permitted by law to
sell insurance directly through the financial institution,
and it establishes a separate division within the financial
institution to conduct the business of the registered firm.
The subsidiary or division acting as a registered firm shall
maintain records for insurance transactions that are
separate and distinct from the records of the financial
institution.
(215 ILCS 5/1405 new)
Sec. 1405. Extensions of credit. A financial
institution shall not delay or impede the completion of a
loan transaction or other transactions involving the
extension of credit for the purpose of influencing a
customer's selection of any insurance product.
(215 ILCS 5/1406 new)
Sec. 1406. Insurance and financial institution
products.
(a) No financial institution may offer banking products
or services, or fix or vary the consideration of the offer,
on a condition or requirement that the customer obtain
insurance from the financial institution or any affiliate of
the financial institution.
(b) A financial institution that offers banking products
or services in conformity with the provisions of Section 106
of the Bank Holding Company Act Amendments of 1970 (12 U.S.C.
1972) shall be deemed to be in compliance with the provisions
of subsection (a) of this Section.
(c) No financial institution shall require that a
customer or prospective customer of the financial institution
purchase an insurance product from any particular registered
firm or insurance producer as a condition for the lending of
money or extension of credit, the establishment or
maintenance of a checking, savings, or other deposit account,
or the establishment or maintenance of a trust account.
(215 ILCS 5/1407 new)
Sec. 1407. Rebating and discounting.
(a) No financial institution may offer a rebate on an
insurance product in violation of Section 151 of this Code.
(b) No financial institution may offer a discount on a
loan or extension of credit for the purpose of inducing the
customer to purchase insurance required in connection with
the loan or extension of credit.
(215 ILCS 5/1408 new)
Sec. 1408. Discrimination prohibited. No financial
institution may:
(1) require as a condition of providing any product or
service or renewal of any contract for providing a product or
service to any customer, that the customer acquire, finance,
or negotiate any policy or contract of insurance through a
particular insurer, insurance producer, or registered firm;
(2) in connection with a loan or extension of credit that
requires a borrower to obtain insurance, reject an insurance
policy solely because the policy has been issued or
underwritten by any person who is not associated with the
financial institution;
(3) impose any discriminatory requirement on any
insurance producer who is not associated with the financial
institution that is not imposed on any insurance producer who
is associated with the financial institution; or
(4) if the financial institution is a registered firm,
require any debtor, insurer, or insurance producer to pay a
separate charge in connection with the handling of insurance
that is required under a contract, unless: (i) the financial
institution is the registered firm providing the insurance,
(ii) if the financial institution is not the registered firm
providing the insurance, the charge would be uniformly
applied if the financial institution was the registered firm
providing the insurance, or (iii) the charge is otherwise
permitted by this Code or other applicable State or federal
law.
(215 ILCS 5/1409 new)
Sec. 1409. Disclosure. A financial institution shall
clearly and conspicuously disclose in any written
advertisement or promotional or informational material
regarding an insurance product that the insurance offered,
recommended, sponsored, or sold:
(1) is not a deposit;
(2) is not insured by the Federal Deposit Insurance
Corporation, or in the case of a credit union, by the
National Credit Union Share Insurance Fund;
(3) is not guaranteed by the financial institution or an
affiliated insured depository institution; and
(4) where appropriate, involves investment risk,
including potential loss of principal.
(215 ILCS 5/1410 new)
Sec. 1410. Misleading advertising. No financial
institution or registered firm may employ any advertisement
that would mislead or otherwise cause a reasonable person to
believe mistakenly that the State of Illinois or the federal
government is responsible for the insurance sales activities
of the financial institution or stands behind the financial
institution's credit, or that the financial institution, the
State of Illinois, or the federal government guarantees any
returns on insurance products or is a source of payment of
any insurance obligation of or sold by the financial
institution.
(215 ILCS 5/1411 new)
Sec. 1411. Commissions and compensation. No financial
institution shall pay, directly or indirectly, any
commission, service fee, brokerage, or other valuable
consideration to any person for services as an insurance
producer, temporary insurance producer, or limited insurance
representative, or for such services by the person's members,
officers, directors or employees, unless the person, and any
member, officer, director, or employee performing the
service, held a valid license regarding the class of
insurance as to which the service was rendered, or unless the
person was a properly registered firm at the time the service
was performed. No person, other than a person properly
licensed or registered in accordance with Article XXXI of
this Code at the time the person performs services as an
insurance producer, temporary insurance producer, or limited
insurance representative, shall accept any commission,
service fee, brokerage, or other valuable consideration for
such services. This Section shall not prevent payment or
receipt of:
(1) renewal or other deferred commissions to or by any
person entitled thereto under this Section;
(2) fees to or by a financial institution or any other
person for services that do not require licensure as an
insurance producer, temporary insurance producer, limited
insurance representative, or registered firm; or
(3) consideration paid to a financial institution by a
registered firm, insurance producer, insurance company, or
any other person pursuant to any lease agreement.
(215 ILCS 5/1412 new)
Sec. 1412. Solicitations to loan applicants.
(a) A financial institution that requires a customer to
obtain insurance in connection with a loan or extension of
credit and that offers that insurance either directly or
through an affiliate shall clearly disclose to the customer
in writing at the time of written application or at closing
if no written application is obtained in a form substantially
similar to the following:
"You may obtain insurance required in connection
with your loan or extension of credit from any insurance
agent, broker, or firm that sells such insurance. Your
choice of insurance provider will not affect our credit
decision or your credit terms.".
(b) This Section shall not apply when a financial
institution is contacting a customer in the course of direct
or mass marketing to a group of persons in a manner that
bears no relation to the customer's loan application or
credit decision.
(215 ILCS 5/1413 new)
Sec. 1413. Separate physical location and sales force
when insurance is solicited or sold in connection with a
loan.
(a) An employee of a financial institution may not
solicit or sell insurance at the same desk where a loan
transaction is conducted when the insurance is solicited or
sold in connection with the same loan.
(b) A loan officer of a financial institution who is
involved in the application, solicitation, or closing of a
loan transaction may not solicit or sell insurance in
connection with the same loan, but such loan officer may
refer the loan customer to another insurance producer who is
not involved in the application, solicitation, or closing of
the same loan transaction.
(c) Subsections (a) and (b) of this Section shall not
apply to a financial institution, other than a credit union,
or a branch location of a financial institution, other than a
credit union, that has less than $100,000,000 in deposits.
(d) Subsections (a) and (b) of this Section shall not
apply to a credit union or a branch location of a credit
union that has less than $30,000,000 in deposits.
(215 ILCS 5/1414 new)
Sec. 1414. Signage. Signs concerning the availability
of insurance products offered by the financial institution or
by any registered firm shall be clearly displayed in the same
area where applications for loans or other extensions of
credit are being taken or closed and shall include the
disclosure set forth in subsection (a) of Section 1412.
(215 ILCS 5/1415 new)
Sec. 1415. Confidential customer information.
(a) A financial institution that is a registered firm may
not release a customer's insurance information to any person
other than an officer, director, employee, agent, or
affiliate of the financial institution without the written
consent of the customer. For the purposes of this Section,
"insurance information" means information concerning the
premiums, terms and conditions of insurance coverage,
insurance claims, and the insurance history of a customer
contained in the financial institution's records.
(b) Subsection (a) of this Section shall not apply to:
(1) names, addresses, and telephone numbers derived
in any manner from the financial institution's records,
or
(2) the release of insurance information as
otherwise authorized by State or federal law.
(c) A financial institution shall not require premium
information when requiring evidence of insurance in
connection with a loan or extension of credit and shall not
use such premium information for the purpose of soliciting
insurance without the written consent of the customer.
(d) A financial institution may not use health
information obtained from a customer's insurance records for
any purpose other than for its activities as a registered
firm pursuant to this Code.
(215 ILCS 5/1416 new)
Sec. 1416. Prohibited defenses. A violation of any
provision of this Article shall not be used as a defense by
any person in any action by a financial institution to
recover the amount owing on any loan or extension of credit.
Section 35. Severability. The provisions of this
amendatory Act of 1997 and the changes made to existing
statutory law by this amendatory Act of 1997 are severable
under Section 1.31 of the Statute on Statutes.
Section 99. Effective date. This Act takes effect on
October 1, 1997.