ORDER OF THE
DEPARTMENT OF FINANCIAL INSTITUTIONS,
APPROVED BY THE GOVERNOR, OCTOBER 26, 2023
DIVISION OF BANKING
AMENDING AND CREATING RULES
The Wisconsin Department of Financial Institutions, Division of Banking by this order repeals DFI-Bkg 3.01, 3.02, 3.08 (5) (c) 3. to 5., 14.03, 15.02 (4), 18.04 (2), ch. 19, 40.03 (1), 41.05 (4), 74.01 (2) (c), 74.15 (2), 75.05 (4), 75.07 (3), 75.10 (7), DFI-SL 1.03 (5) (b) explanatory note, 3.02, 5.01 (1) (a) 1. and 2. , 6.05 (1), 12.03, DFI-SB 6.05 (1), 12.03, 16.03 (5) Note, 22.01 (12), and DFI-WCA 1.241, 1.65, and 1.655 of the Wisconsin Administrative Code; renumbers DFI-Bkg 14.07 (2) (a) 5., 6., 7., and 8., 18.01 (1), 18.04 (1), 74.01 (1) (e), 74.06, 74.10 (2), and 74.15 (1), DFI-SL 1.03 (8), and 5.01 (1) (a) (intro.); amends DFI-Bkg 3.03 (intro.) and (1), 3.04 (5), 3.05 (1) (b) (intro.) 1., and 2., (c) (intro.) and 1. to 4. , (d) (intro.) and 1., (f) (intro.) and 1., and (g), (2) (a) (intro.) and 1., (3) (a) (intro.), 1., and 2., and (b), 3.06 (1) (intro.), (a) and (b), 3.07 (1), 3.08 (1) (h) (intro.), 1. and 2. (2) (a), (b), and (c) (intro.), (5) (c) 1. and 2., and (d) 1. and 2., 4.08, 8.01 (1), 8.09, 11.02, 11.03, 11.06 (2), 11.07, 11.08 (1), 11.09, 11.11, 11.13, 11.14, 11.15 (1) (intro.) and (a), (b), and (c), 14.02, 14.04 (1) (intro.) and (a) to (c) and (2) (intro.) and (a), 14.06 (intro.), (1), (2) (intro.), (a), and (b), and (3) (intro.) and (a), 14.08 (2) (a) and (b), (3) (intro.), and (4), 16.05, 16.06, 17.02, 17.05, 17.06, 17.07, 17.08 (1) (intro.) and (2) (intro.), 18.02, 18.03, 18.05, 18.06, 18.07, 40.03 (2), 40.04, 40.06, 41.05 (3) and (5), 42.02, 43.01 (intro.), 73.04 (6), 74.01 (1), 74.01 (2) (d), 74.01 (6), 74.02 (1) (a) (title) and (a), 74.04 (1) (intro.), 74.05 (1) (intro.) and (c), 74.07 (1) (intro.), 74.13 (1), 74.16 (intro.) and (9), 75.03 (1) to (3), (4) (intro.), (6), and (7), 75.06 (3), 75.08 (4) (a), 75.10 (1) (c), 76.01 (1), 76.13 (1), 77.03 (1), 77.07, 77.09 (intro.) and (3), 78.02 (1) and (2), and 78.03 (2) (i), DFI-SL 1.01, 1.02, 1.03 (intro.) and (6), 6.05 (title) and (2), 9.03, 13.01 (3), 13.03 (3) (d) 6., 15.01 (5) (a) to (c), 16.01 (8), 16.06 (2), 17.08 (4), and 21.04 Note; DFI-SB 2.04 (2) and (5) (b), 6.05 (6) (title) and (2), 12.01, 16.03 (5), 21.10 (2), 21.13 (3), 22.01 (5) (a) 1., 22.03 (1) (d), and 22.09 (2), and DFI-WCA 1.85 (3); repeals and recreates DFI-SB 13.03; and creates DFI-Bkg 3.08 (2) (intro.), 11.08 (2), 18.01 (1e), 18.01 (1m), 74.01 (5m), 74.06 (1) and (6), 74.07 (1) (j), 74.10 (1) (c) and (2) (a), 74.11 (10), and 74.16 (9m), and DFI-SL 1.03 (5m) of the Wisconsin Administrative Code, relating to authorizing the use of mobile and intermittent branches by state banks, eliminating obsolete provisions, correcting cross-references, eliminating rules that conflict with statutes, correcting errors, modifying the structure of existing rules in nonsubstantive ways, and clarifying rules governing collection agencies. The scope statement for this rule was approved by the Governor on October 13, 2022, published in Administrative Register No. 802A4 on October 24, 2022, and approved by the Division of Banking on November 7, 2022. On June 13, 2023, the Banking Institutions Review Board approved the modification of Wis. Admin. Code DFI-Bkg 8.01 (1) as contained in this proposed rule. ______________________________________________________________________________
ANALYSIS
1. Statutes interpreted:
2. Statutory authority:
3. Explanation of agency authority:
The Division of Banking, a division of the Department of Financial Institutions, has general and specific supervisory authority over state banks, savings and loan associations, savings banks, and collection agencies. Some of the Division’s rulemaking authority is subject to the approval of the banking institutions review board (BIRB). Specifically, the Division may “by rule . . . with the approval of the [BIRB]” authorize state banks to “exercise any right, power, or privilege permitted national banks under federal law, regulation, or interpretation.” See Wis. Stat., s. 220.04 (8). With regard to savings banks, the Division is required to “promulgate rules” to supervise such institutions. See Wis. Stat., s. 214.715 (1) (d). With regard to collection agencies, the Division has the duty and authority to “make all necessary or proper orders, rules and regulations for the administration and enforcement of this section.” See Wis. Stat., s. 218.04 (7) (d). All other proposed amendments are non-substantive and seek to ensure that rules the Division administers are compliant with Wis. Stat., s. 227.14 (1), which requires that in drafting administrative rules “an agency shall adhere substantially to the form and style used by the legislative reference bureau in the preparation of bill drafts and the form and style specified in the manual prepared by the legislative council staff and the legislative reference bureau under s. 227.15 (7),” and with Wis. Stat., s. 227.29 (1), which directs agencies to address rules that are “unauthorized,” “obsolete or that have been rendered unnecessary,” or “duplicative of, superseded by, or in conflict with another rule, a state statute, a federal statute or regulation, or a ruling of a court of competent jurisdiction.” 4. Related statutes or rules:
Not applicable.
5. Plain language analysis:
Under the proposed rules, the Division seeks to amend certain rules it administers in three respects.
First, it proposes to modify Wis. Admin. Code DFI-Bkg 8.01 (1), which currently defines a state bank branch as a “permanent” facility, to allow state banks to offer services through attended mobile or intermittent branches as well, subject to the approval of the Division. This change will enable banks to extend services to Wisconsinites in areas that may be underbanked and whose residents may be underserved, and to areas where permanent branches may not be feasible. Authorizing such branches also helps state banks maintain parity with national banks (which are authorized to operate mobile and intermittent branches), and state savings banks, state savings and loan associations, and state credit unions (which are not subject to rules limiting their branches to “permanent” locations).
Second, the Division proposes to update certain rules governing collection agencies, which are licensed by the Division, to reflect changes in industry practices during the 16 years since the existing rules were enacted. The proposed rules would clarify the meaning of the term “actual process of collection;” specify that a “terminated license” includes any license that has expired or been surrendered or revoked; clarify that a licensee’s trust checking account must be identified as a “trust account;” restrict third-party payment processors from withdrawing funds from a trust account; clarify that a collection agency may charge a contracted fee for reasonable costs incurred for each account placed in error by the creditor that is returned to the creditor; and require a collection agency to disclose and obtain Division approval for a trade name before using it to conduct business in the state.
Third, the Division proposes several non-substantive revisions to its rules to keep up to date with current law and drafting practices, including:
a. Eliminating obsolete rules identified by staff or in the rules report required under Wis. Stat., s. 227.29 (1) (c), or rules that conflict with other state or federal rules or statutes as provided under Wis. Stat. s. 227.29 (1) (d). b. Correcting erroneous cross-references to other state or federal rules or statutes.
c. Modifying the structure of existing rules in nonsubstantive ways to ensure that the rules are drafted to be substantially in the form and style used by the legislative reference bureau, and consistent with the manual prepared by the bureau and the legislative council staff, as provided in Wis. Stat., ss. 227.14 (1) and 227.15 (7). 6. Summary of, and comparison with, existing or proposed federal regulation:
Under federal law, a branch of a national bank may include “a mobile facility, a temporary facility, or an intermittent facility.” See 12 CFR § 5.30 (d) (1) (i). 7. Comparison with rules in adjacent states:
