Committee Report

May 6, 2026

 

H. 5538

 

Introduced by Reps. Pope, Herbkersman, G. M. Smith, Hartz, W. Newton, Jordan, Ligon, Oremus, Neese, Taylor, Hiott, Cromer, Gilreath, Morgan, Lastinger, Huff, Burns, Chumley, Beach, D. Mitchell, McCabe, Pedalino, Vaughan, Kilmartin, Gibson and Govan

 

S. Printed 5/6/26--S.

Read the first time April 28, 2026

 

________

 

The committee on Senate Banking and Insurance

To whom was referred a Bill (H. 5538) to amend the South Carolina Code of Laws by enacting the "Guarantee Banking Act" by adding Chapter 47 to Title 34 so as to provide for fairness and transparency, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, by striking all after the enacting words and inserting:

SECTION 1.  This act may be cited as the "Guarantee Banking Act."

 

SECTION 2.  Title 34 of the S.C. Code is amended by adding:

 

CHAPTER 47

 

Guarantee Banking

 

    Section 34-47-10.  As used in this chapter:

       (1) "Adverse action" means a decision by a financial institution to decline to provide full and equal access in the provision of covered financial services and includes refusing to provide, terminating, or restricting covered financial services. "Adverse action" does not include the temporary suspension or restriction of an account pending an internal investigation, fraud review, or verification of identity.

       (2) "Discriminate in the provision of covered financial services" means taking an adverse action against a customer on the basis of one of the following criteria:

           (a) any person's exercise of religion that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this State, including all aspects of religious observance and practice, as well as belief and affiliation;

           (b) any person's speech, expression, opinions, expressive activity, or association that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this State, including the lawful preservation of privacy regarding those activities, such as declining to disclose contributions or political activity beyond what is required by applicable state and federal law. This section does not prohibit a financial institution from declining to provide financial services to a person that is engaged in fraud, criminal conduct, incitement to unlawful actions, or that creates obscenity or another form of expression that is not protected by the Constitution of South Carolina or the United States Constitution;

           (c) any factor if it is not a quantitative, impartial, and risk-based standard, including any such factor related to the person's business sector;

           (d) animus towards a person based on the factors in subitem (a), (b), or (c); and

           (e) a desire to, directly or indirectly, obtain a gain from or avoid a loss imposed on the covered financial institution by any person for the purpose of encouraging the covered financial institution to take an adverse action based on any of the factors in subitem (a), (b), or (c).

       (3)(a) "Financial institution" means:

               (i) a bank that has total assets over one hundred billion dollars; or

               (ii) a payment processor, credit card company, credit card network, payment network, payment service provider, or payment gateway that has processed more than one hundred billion dollars in transactions in the last calendar year.

           (b) A financial institution includes any parent company, holding company, affiliate, or subsidiary company, even if that company is also a financial institution.

       (4)(a) "Covered financial service" means:

               (i) depository accounts including, but not limited to, checking accounts, savings accounts, or NOW accounts;

               (ii) money transmission including, but not limited to, checking, payment services, ACH, or credit card networks; or

               (iii) credit including, but not limited to, personal loans, mortgages, business loans, or credit cards.

           (b) "Covered financial service" does not include the provision of insurance or the underwriting of or an investment in a security as defined by federal law.

       (5) "Person" means any individual, partnership, association, joint stock company, trust, corporation, nonprofit organization, or other business or legal entity that is a resident of this State or has its principal place of business in this State.

 

    Section 34-47-20.  (A) If a financial institution takes an adverse action against a person, that person may request a statement of specific reasons within ninety days after receiving notice of the refusal to provide service, restriction of service, or termination of service.

    (B) The person may request the statement from a customer service representative or designated account representative by phone, U.S. mail, or electronic mail.

    (C) When a person requests a statement pursuant to subsections (A) and (B), then that person must specifically describe the alleged adverse action, including which provision of Section 34-47-10(2) is the basis for the alleged adverse action.

    (D) Unless otherwise prohibited or otherwise required by federal law, the financial institution shall transmit the statement of specific reasons via U.S. mail and electronic mail, if known to the financial institution, within thirty days of receiving the person's request.

    (E) The statement must be specific and include a description of the principal reason for the adverse action. A statement that the adverse action was based on the institution's internal standards or policies or that the person failed to achieve a qualifying score on the institution's credit scoring system is insufficient. If any criteria listed in Section 34-47-10(2) factored into the institution's decision to take an adverse action, it must be described in the statement.

    (F) If the financial institution provides an adverse action statement to the customer consistent with its obligations under the Equal Credit Opportunity Act, 15 U.S.C. Section 1691 et. seq., and implementing regulations or the Fair Credit Reporting Act, 15 U.S.C. Section 1681 et. seq., and implementing regulations, that statement satisfies the requirements of this subsection, provided that if any criteria listed in Section 34-47-10(2) factored into the institution's decision to take an adverse action, it must be described in the statement, a supplement to the statement, or a separate statement that is provided to the customer contemporaneously with the Equal Credit Opportunity Act or Fair Credit Reporting Act adverse action statement.

    (G) Nothing in this section shall be construed to require a covered entity to provide notice or take any action that would conflict with applicable federal law, regulation, or supervisory guidance.

 

    Section 34-47-30.  A financial institution may not:

       (1) discriminate in the provision of financial services to a person;

       (2) agree, conspire, or coordinate, including through any intermediary or third party, with another person, or group of persons, to engage in activity prohibited pursuant to item (1); or

       (3) fail to provide or provide false or intentionally misleading information in the statement required pursuant to Section 34-47-20.

 

    Section 34-47-40.  It is not a violation of this chapter for a financial institution to take any of the following actions, provided that the action was made in good faith and not motivated by animus or a desire to discriminate in the provision of covered financial services against a person:

       (1) a change in the terms of an account expressly agreed to by a customer;

       (2) any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account;

       (3) a refusal to provide services because applicable federal or state law prohibits the covered financial institution from providing the service requested;

       (4) a refusal to provide a service because the covered financial institution does not offer the type of service requested;

       (5) a decision based solely on any of the following valid business factors, if made in an impartial manner and in good faith:

           (a) maximizing profitability or shareholder value, provided this determination is not based on a desire to obtain a benefit or avoid a harm imposed by another person because the covered financial institution served a customer;

           (b) complying with legitimate legal or regulatory requirements; or

           (c) maintaining the safety and soundness of a covered financial institution or its employees.

 

    Section 34-47-50.  Any violation of this chapter is an unfair or deceptive act or practice and, in addition to the rights and remedies provided in this chapter, the Attorney General may pursue any other remedies provided for by law.

 

    Section 34-47-80.  The State and any political subdivision thereof may not impose any restriction, obligation, or penalty identical or substantially similar to what is contained in this chapter, whether by regulation, rule, guidance, or enforcement, on financial institutions not covered by this chapter, unless the State or any political subdivision thereof is required to impose such restriction, obligation, or penalty under federal or state law.

 

    Section 34-47-90.  This chapter must be construed in favor of the broad protection of the conduct, opinions, and beliefs protected by the First Amendment to the United States Constitution, applicable federal laws, the Constitution of South Carolina, and state law.

 

SECTION 3.  This act takes effect six months after the signature by the Governor.

Renumber sections to conform.

Amend title to conform.

 

RONNIE CROMER for Committee.

 

_______

 

 

 

 

 

 

 

 

A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE "GUARANTEE BANKING ACT" BY ADDING CHAPTER 47 TO TITLE 34 SO AS TO PROVIDE FOR FAIRNESS AND TRANSPARENCY IN BANKING.

 

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

 

SECTION 1.  This act may be cited as the "Guarantee Banking Act."

 

SECTION 2.  Title 34 of the S.C. Code is amended by adding:

 

CHAPTER 47

 

Guarantee Banking

 

    Section 34-47-10.  As used in this chapter:

       (1) "Adverse action" means a decision by a financial institution to directly or indirectly decline to provide full and equal access in the provision of covered financial services and includes refusing to provide, terminating, or restricting covered financial services.

       (2) "Discriminate in the provision of covered financial services" means taking an adverse action against a customer on the basis of one of the following criteria:

           (a) any person's exercise of religion that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this State, including all aspects of religious observance and practice, as well as belief and affiliation;

           (b) any person's speech, expression, opinions, expressive activity, or association that is protected by the First Amendment to the United States Constitution, federal law, or the Constitution or laws of this State, including the lawful preservation of privacy regarding those activities, such as declining to disclose contributions or political activity beyond what is required by applicable state and federal law. This subitem does not include speech that the United States Supreme Court has expressly held is unprotected, such as obscenity, fraud, incitement, true threats, fighting words, or defamation;

           (c) any person's participation in lawful economic activity;

           (d) animus towards a person based on the factors in subitem (a), (b), or (c); and

           (e) a desire to, directly or indirectly, obtain a gain from or avoid a loss imposed on the covered financial institution by any person for the purpose of encouraging the covered financial institution to take an adverse action based on any of the factors in subitem (a), (b), or (c).

       (3)(a) "Financial institution" means:

               (i) a bank that has total assets over one hundred billion dollars; or

               (ii) a payment processor, credit card company, credit card network, payment network, payment service provider, or payment gateway that has processed more than one hundred billion dollars in transactions in the last calendar year.

           (b) A financial institution includes any parent company, holding company, affiliate, or subsidiary company, even if that company is also a financial institution.

       (4)(a) "Covered financial service" means:

               (i) depository accounts including, but not limited to, checking accounts, savings accounts, or NOW accounts;

               (ii) money transmission including, but not limited to, checking, payment services, ACH, or credit card networks; or

               (iii) credit including, but not limited to, personal loans, mortgages, business loans, or credit cards.

           (b) "Covered financial service" does not include the provision of insurance or the underwriting of or an investment in a security as defined by federal law.

       (5) "Person" means any individual, partnership, association, joint stock company, trust, corporation, nonprofit organization, or other business or legal entity.

 

    Section 34-47-20.  (A) If a financial institution takes an adverse action against a person, that person may request a statement of specific reasons within ninety days after receiving notice of the refusal to provide service, restriction of service, or termination of service.

    (B) The person may request the statement from a customer service representative or designated account representative by phone, U.S. mail, or electronic mail.

    (C) Unless otherwise prohibited by federal law, the financial institution shall transmit the statement of specific reasons via U.S. mail and electronic mail, if known to the financial institution, within thirty days of receiving the person's request.

    (D) The statement must be specific and include a description of the principal reason for the adverse action. A statement that the adverse action was based on the institution's internal standards or policies or that the person failed to achieve a qualifying score on the institution's credit scoring system are insufficient. If any criteria listed in Section 34-47-10(2) factored into the institution's decision to take an adverse action, it must be described in the statement.

    (E) If the financial institution provides an adverse action statement to the customer consistent with its obligations under the Equal Credit Opportunity Act, 15 U.S.C. Section 1691 et. seq., and implementing regulations, that statement must be considered to satisfy the requirements of this subsection, provided that if any criteria listed in Section 34-47-10(2) factored into the institution's decision to take an adverse action, it must be described in the statement, a supplement to the statement, or a separate statement that is provided to the customer contemporaneously with the Equal Credit Opportunity Act adverse action statement.

 

    Section 34-47-30.  A financial institution may not:

       (1) discriminate in the provision of financial services to a person;

       (2) agree, conspire, or coordinate, directly or indirectly, including through any intermediary or third party, with another person, or group of persons, to engage in activity prohibited pursuant to item (1); or

       (3) fail to provide or provide false or intentionally misleading information in the report required pursuant to Section 34-47-20.

 

    Section 34-47-40.  It is not a violation of this chapter for a financial institution to take any of the following actions, provided that the action was made in good faith and not motivated by animus or a desire to discriminate in the provision of covered financial services against a person:

       (1) a change in the terms of an account expressly agreed to by a customer;

       (2) any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account;

       (3) a refusal to provide services because applicable federal or state law prohibits the covered financial institution from providing the service requested;

       (4) a refusal to provide a service because the covered financial institution does not offer the type of service requested;

       (5) a decision based solely on any of the following valid business factors, if made in an impartial manner and in good faith:

           (a) maximizing profitability or shareholder value, provided this determination is not based on a desire to obtain a benefit or avoid a harm imposed by another person because the covered financial institution served a customer;

           (b) complying with legitimate legal or regulatory requirements; or

           (c) maintaining the safety and soundness of a covered financial institution or its employees.

 

    Section 34-47-50.  Any violation of this chapter is an unfair or deceptive act or practice and, in addition to the rights and remedies provided in this chapter, the State Attorney General or other competent official may pursue any other remedies provided for by law.

 

    Section 34-47-80.  The State and any political subdivision thereof may not impose any restriction, obligation, or penalty identical or substantially similar to what is contained in this chapter, whether by regulation, rule, guidance, or enforcement, on financial institutions not covered by this chapter, unless the State or any political subdivision thereof is required to impose such restriction, obligation, or penalty under federal or state law.

 

    Section 34-47-90.  This chapter must be construed in favor of the broad protection of the conduct, opinions, and beliefs protected by the First Amendment to the United States Constitution, applicable federal laws, the Constitution of South Carolina, and state law.

 

SECTION 3.  This act takes effect upon approval by the Governor.

----XX----