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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsJune 2014

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(5 Del.C. §§121(b), 2202(b), 2304(c), and 3409)
5 DE Admin. Code 2207, 2302, 3401 and 3402
The State Bank Commissioner proposes to amend four Regulations adopted in accordance with Title 5 of the Delaware Code. Regarding Title 5, Chapter 22 (Licensed Lenders), the proposed amendment to Regulation 2207 (Exemption of Licensed Lenders) deletes certain outdated provisions and specifies that all exemptions issued pursuant to 5 Del.C. §2202(b) shall expire on December 31 of each year. Regarding Title 5, Chapter 23 (Sale of Checks and Transmission of Money), the proposed amendment to Regulation 2302 (Exemptions) specifies that all exemptions issued pursuant to 5 Del.C. §2304(c) shall expire on December 31 of each year. Regarding Title 5, Chapter 34 (Preneed Funeral Contracts), the proposed amendments to Regulation 3401 (Operating Regulation) and Regulation 3402 (Surety Bond or Irrevocable Letter of Credit) clarify, streamline and update the existing regulations for ease of understanding and increased relevance to current licensee operations. Other regulations issued by the State Bank Commissioner are not affected by this proposal. The State Bank Commissioner is issuing these proposed amended regulations in accordance with Title 5 of the Delaware Code. This notice is issued pursuant to the requirements of Title 29 of the Delaware Code, Chapter 11, Subchapter III, and Chapter 101, Subchapter II.
A copy of the proposed amended regulations is being published in the June 1, 2014 edition of the Delaware Register of Regulations. A copy is also on file in the Office of the State Bank Commissioner, 555 E. Loockerman Street, Suite 210, Dover, DE 19901 and is available for inspection during regular office hours. Copies are available upon request.
5 Del.C. §2202(b)
Effective Date: June 11, 2001 Proposed
1.1 This regulation governs the procedures and requirements for exemptions pursuant to 5 Del.C. §2202(b).
For the purpose of this regulation, the following definitions apply:
“Commissioner” means the State Bank Commissioner.
“Exempt Person” means a person that has been granted an exemption from the Statute pursuant to 5 Del.C. §2202(b) and this regulation.
“Existing Exemption” means an exemption from the Statute granted before the effective date of this regulation.
“Person” means an individual, corporation, partnership, or any other business entity or group or combination of individuals however organized.
“Statute” means 5 Del.C. Ch. 22.
3.3 A person shall not be deemed to be transacting the business of lending money within the meaning of 5 Del.C. §2202 and shall not be subject to this regulation or the licensing requirements of the Statute solely because the person is a participating merchant as the term is used in the Statute.
4.1 An exempt person shall at all times maintain such financial responsibility, experience, character, and general fitness as to command the confidence of the community and to warrant belief that its business will be operated honestly, fairly, and efficiently within the purposes of the Statute.
7.1 Unless the Commissioner specifies otherwise, Subchapter II and Subchapter III of the Statute shall apply to all exempt persons as if they were licensees.
8.1 Except as otherwise provided in this regulation, exemptions shall expire one year from the date granted on December 31 of each year.
10.1 Exempt persons shall notify the Commissioner within 30 days of any changes in the information contained in the application for its exemption or the renewal thereof.
11.1 An exempt person who applies for a license under the Statute before the expiration or revocation of its exemption shall have the exemption automatically extended until a final decision is made on the license application.
132.0 Suspension or Revocation
132.1 The Commissioner may suspend or revoke any exemption upon a finding that:
132.1.1 The exempt person has violated any statute, judicial order, administrative order, rule, regulation or other law of the State of Delaware, any other state or the United States of America;
132.1.2 Any fact or condition exists which if it had existed at the time of the application or renewal for the exemption, would have warranted the Commissioner in refusing to issue the exemption or its renewal;
132.1.3 The exempt person has engaged in unfair or deceptive business activities or practices in connection with extensions of credit to consumers. Unfair or deceptive activities and practices include, but are not limited to, the use of tactics which mislead the consumer, misrepresent the consumer transaction or any part thereof, or otherwise create false expectations on the part of the consumer; or
132.1.4 The exempt person does not meet the qualifications specified in Section 4 of this regulation.
132.2 No exemption shall be suspended or revoked except in accordance with the procedures for suspending or revoking a license that are specified in the Statute and in the Delaware Administrative Procedures Act, 29 Del.C. Ch. 101.
132.3 No suspension or revocation of an exemption shall impair or affect the obligation of any preexisting lawful contract between the exempt person and any other person.
143.0 Exemption Denials
14.1 If the Commissioner denies an exemption or the renewal of an exemption, the Commissioner shall promptly send the applicant or exempt person a written order to that effect which states the grounds for the denial. The applicant or exempt person may request that the Commissioner hold a hearing to reconsider that denial, in accordance with the procedures for requesting a hearing on the denial of a license application that are specified in the Statute and in the Delaware Administrative Procedures Act, 29 Del.C. Ch. 101. The Commissioner may extend the term of any exemption whose renewal has been denied until the final resolution of that hearing.
154.0 Fees
154.1 The investigation fee for an application for an exemption shall be $250.00 and shall be submitted with the application.
154.2 The investigation fee for renewal of an exemption shall be $100.00. A renewal application must be submitted more than 30 days in advance of the exemption’s expiration.
154.3 A renewal application submitted less than 30 days in advance of the exemption's expiration shall be treated as a new application for an exemption and shall be subject to the investigation fee of $250.
5 Del.C. §2318 §2304(c)
Effective Date: November 11, 2007 Proposed
"Commissioner" means the State Bank Commissioner.
"Exempt person" means a person exempt from any of the requirements of the Statute pursuant to 5 Del.C. §2304(c) and this regulation.
"Person" means any individual, partnership, association, joint stock association or corporation, but does not include the United States government or the government of the State of Delaware.
"Statute" means 5 Del.C. Ch. 23.
Except as otherwise provided in this regulation, exemptions shall expire one year from the date granted on December 31 of each year.
3401 Regulations Governing Revocable and Irrevocable Trust Agreements Operating Regulation
5 Del.C. §§3404 and 3409
Effective Date: November 12, 1999 Proposed
All licenses under 5 Del.C. Ch. 34 shall expire on December 31 of each year. A renewal application must be submitted to the Commissioner before that date for a license to remain in effect.
2.1 All licensees shall comply with 5 Del.C. Ch. 34, all regulations issued thereunder, and all other applicable State and federal statutes and regulations relating to preneed funeral contracts.
3.1 Each licensee shall maintain any records necessary to verify the licensee’s compliance with 5 Del.C. Ch. 34, all regulations issued thereunder, and all other applicable State and federal statutes and regulations relating to preneed funeral contracts.
Each licensee shall prominently display its license issued under 5 Del.C. Ch. 34 in clear view of all customers.
15.0 Annual Statements to Preneed Contract Beneficiaries
15.1 At least once, annually, a each licensee shall mail or deliver, to each party for whom such licensee holds a beneficiary of its preneed funeral contracts, or an appropriate representative of the beneficiary, a statement containing, at a minimum, the following information:
1.1.1 5.1.2 the previous balance in the total amount held in that trust account or at the beginning balance for of the statement period;
1.1.2 5.1.3 the number and amounts of payments received for during the statement period;
1.1.3 5.1.4 the amount of interest accrued interest for during the statement period; and
1.1.4 5.1.5 the “ending” or total account balance for amount held in the trust account at the end of the statement period; and.
6.1 Each licensee shall submit to the Commissioner on July 31st of each year a statement containing the following information for each of its preneed funeral contracts:
27.0 Disclosure Requirements for the Irrevocable Trust Documents
27.1 The trust document establishing the an irrevocable trust permitted by Section 3404 of Title 5 of the Delaware Code shall contain, at a minimum, the following mandatory provisions:
27.1.1 A provision which expressly identifies stating that the trust as is irrevocable for the lifetime of the beneficiary;
27.1.2 A provision for the disposition of trust funds to an alternate trustee that upon the discontinuation of business or the inability to provide the contracted goods or services by the original trustee in accordance with the terms of the trust or a provision for the transfer of trust funds, to a new trustee, at the consumer's election, the funds held in the trust shall be transferred to either a specified successor trustee or a successor trustee selected by either the contract beneficiary, or an appropriate representative of the beneficiary;
27.1.3 A provision that in the event funds paid into if funds held by the trust are inadequate, at the time of the death of the contract beneficiary, to cover anticipated the beneficiary’s funeral expenses, the trustee shall contribute all trust funds toward payment of the actual funeral expenses for the funeral of the beneficiary those expenses;
27.1.4 A provision that in the event the sum if the funds held by the trust exceeds the total actual costs of the goods and services for the funeral of the beneficiary the beneficiary’s funeral expenses, the excess funds shall be paid to the beneficiary’s estate of the beneficiary;
27.1.5 A provision that the trustee may, from time to time, accept periodic monetary contributions to the trust, provided that the principal sum contributed, exclusive of interest earned, shall not exceed $10,000; and
27.1.6 A provision which shall state stating “In no event shall the principal amount of the trust exceed $10,000 plus $15,000, excluding accrued interest.”
8.1 The Commissioner may examine licensees pursuant to Section 122 of Title 5 of the Delaware Code. The costs of such examination are assessed in accordance with Section 127(a) of Title 5. A licensee shall remit payment not later than 30 days after the date of the examination invoice.
5 Del.C. §§3409 and 3411
Effective Date: November 11, 2007 Proposed
1.0 Bond or Irrevocable Letter of Credit Required
A Each licensee shall file with the State Bank Commissioner (the "Commissioner") an original corporate surety bond or an irrevocable letter of credit in a form satisfactory to the Commissioner in accordance with 5 Del.C. §3411. The minimum amount of the surety bond or irrevocable letter of credit is based on the factors identified in that section.
2.0 Amount of Bond or Irrevocable Letter of Credit
2.1 A Each licensee shall obtain a surety bond or irrevocable letter of credit in a minimum amount in accordance with the following table based upon the maximum dollar value of the trust funds it held as a trustee during the twelve month period ending October 31 that precedes the calendar year for which the bond or irrevocable letter of credit is effective. A licensee who obtains a surety bond that is effective for more than one year or an irrevocable letter of credit shall annually review the amount of the surety bond or letter of credit, to ensure that the minimum required amount is maintained. The minimum required amount of the surety bond or irrevocable letter of credit shall be maintained according to the following table:
3.0 2.2 Subject to the $200,000 cap, Tthe Commissioner may require a licensee to obtain a larger surety bond or irrevocable letter of credit based upon the licensee’s individual circumstances.
4.0 A licensee that obtains a surety bond or irrevocable letter of credit that is effective for more than one year shall review on November 1 of each year the dollar value of the trust funds it held during the previous twelve month period to ensure that the minimum required amount for its surety bond or irrevocable letter of credit is maintained for the following calendar year.
Last Updated: December 31 1969 19:00:00.
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