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  • Summary date: Apr 29 2019 - View Summary

    Enacts GS Chapter 53D, NC Financial and Insurance Regulatory Sandbox act. Sets forth the act's short title, legislative findings, and defined terms. 

    Establishes the seven-member NC Financial and Insurance Innovation Commission (Commission) within the Office of the Commissioner of Banks (Office), charged with oversight of the Regulatory Sandbox under the Chapter and developing a regulatory environment that encourages and supports innovation, investment, and job creation in the financial and insurance industries in the State. Provides for Commission membership, quorum, and public member compensation. 

    Authorizes a Regulatory Sandbox registrant to test products and services on consumers in accordance with the Chapter, adopted rules, or conditions of the Commission. Limits testing to no more than 25,000 consumers and prohibits tests from affecting transactions or policies over $50,000 per consumer, unless permitted by the Commission. Provides that the statute controls over conflicting state law, except for GS Chapters 24 (Insurance), 25A (Retail Installment Sales Act), 25B (Credit), and 75 (Monopolies, Trusts and Consumer Protection), and Article 20 (Loan Brokers) of GS Chapter 66. 

    Provides for the application process for persons to register in the Regulatory Sandbox. Requires applicants or their designees to provide specified information to the Commission, verified by oath or affirmation, including criminal conviction records for the preceding ten-year period. Also requires detailed information about the product or service to be tested by the applicant, including state laws that would be superseded if the Commission allowed the applicant to test the product or service, and a plan for testing, monitoring, and assessing the product or service. Sets the application fee at $500. 

    Directs the Commission to notify the Office upon receipt of an application. Requires the Office to investigate the applicant's financial condition and responsibility, financial and business experience, and character and general fitness, as well as the proposed testing's risk to consumers and the adequacy of the applicant's proposed plan. Requires consultation with the Department of Insurance for products or services that are insurance innovations. Directs the Office to report its findings to the Commission. 

    Provides for abandoned applications. Requires the Commission to make a decision on applications within 90 days of submission. Allows for issuance of registration upon the Commission making six specified findings regarding the applicant's qualifications. Authorizes the Commission to impose conditions on a registrant's test. Requires the Commission to inform an applicant denied registration each ground for the denial. 

    Establishes that registration is valid for two years after issuance. Provides for registration renewal 30 days' prior to expiration upon submission of the same information and fee as required of the initial application. Subjects renewal applications submitted after the 30 days before expiration but before expiration to a $100 late fee. Provides for renewal applications to be considered and investigated in the same manner as initial applications. Deems registration effective during the pendency of the renewal application. 

    Authorizes the Commission to  require a registrant to (1) post a surety bond for the benefit of any consumers harmed by the test, as specified by the Commission, or (2) obtain insurance coverage to address any cybersecurity risks of the test. Provides for certain deposits in lieu of a surety bond. Requires the surety bond or deposit to remain in place for at least one year after the registrant ceases to be registered. Requires a registrant to give the Commissioner of Banks (Commissioner) 90 days' written notice before cancelling the surety bond or withdrawing the deposit. 

    Details prohibited conduct of registrants, including directly or indirectly defrauding or misleading a person; making false statements or material omissions concerning state and federal filings, investigations, and examinations; and knowingly withholding or destroying evidence during an investigation or examination by the Commissioner under the Chapter. 

    Authorizes the Commissioner to investigate and examine a registrant's compliance with the Chapter. Enumerates the powers of the Commissioner related to compliance investigations and examinations, including retaining attorneys, accountants, and other professionals and specialists to conduct or assist in conducting the investigation or examination. 

    Prohibits the Commissioner from prohibiting a registrant access to its own records necessary to conduct its ordinary business unless the Commissioner has reason to believe there is a risk that the records will be altered or destroyed to conceal a violation of the Chapter. Authorizes the Commissioner to assess costs for conducting an extraordinary review against the registrant. 

    Provides for confidential treatment of all information obtained by the Commissioner as provided in GS 53C-2-7. Authorizes the Commissioner to enter into agreements or arrangements with state and federal agencies for sharing confidential information, with information shared maintaining all applicable privileges and confidentiality protections. 

    Authorizes the Commissioner to take disciplinary action against a registrant's registration for any violation of the Chapter or rules adopted thereunder. Authorizes the Commissioner to issue cease and desist orders or to apply for an injunction against a registrant for violations. Allows consumers harmed by a test conducted by a registrant to bring an action against the registrant for damages.

    Provides for a registrant's consent to state jurisdiction and appointment of the Secretary of State as its agent for accepting service of process for actions arising under the Chapter. Deems the Commissioner to have complied with service requirements upon mailing certified notice, as specified. 

    Authorizes the State Banking Commission to adopt implementing rules.

    Effective October 1, 2020.