7 TAC §25.11
The Texas Department of Banking (the "department") proposes
an amendment to §25.11, concerning record-keeping requirements for trust-funded
contracts.
The proposed amendment to §25.11 will simplify and clarify record-keeping
requirements by deleting obsolete requirements, adding explanations and other
details, specifying optional records that can satisfy a requirement, and by
rewording specifications.
Stephanie Newberg, Director, Special Audits Division, Texas Department
of Banking, has determined that, for each year of the first five years the
section is in effect, there will be no fiscal implication for state or local
government as a result of enforcing or administering this section as amended.
Ms. Newberg also has determined that, for each year of the first five years
the section is in effect as amended, the public benefit anticipated as a result
of the adoption of this section is clarification of the section's meaning,
consistency in requirements pertaining to related provisions; and simplification
of record-keeping requirements without diminishing safeguards to the public.
No economic cost will be incurred by a person required to comply with this
section, and there will be no effect on small businesses.
Comments regarding the proposal may be submitted to Sharon Gillespie, Assistant
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard,
Austin, Texas 78705-4294, or by e-mail to sharon.gillespie@banking.state.tx.us.
The amendment is proposed pursuant to Finance Code, §154.051(b)(2),
which authorizes the department to adopt reasonable rules concerning the keeping
and inspection of records relating to the sale of prepaid funeral benefits.
Finance Code, Chapter 154, is affected by the proposed section.
§25.11.Record Keeping Requirements for Trust-Funded Contracts.
(a)
(No change.)
(b)
General file. A permit holder subject to this section must
maintain general files regarding its prepaid funeral benefits operations.
Such files may be maintained in hard-copy form or on microfiche or in an electronic
database from which they may be reasonably retrieved in hard-copy form. These
files must contain the original or a copy of the following:
(1)
[
the initial permit application and
] the latest
approved renewal permit application for the permit holder and its last filed
annual report, if any;
(2)
(No change.)
(3)
each contract form approved for sales transacted
within the last three years unless no outstanding contracts exist using such
form
[
after the effective date of this section for so long as there
are outstanding contracts using such form
];
(4)
(No change.)
(5)
the most current
consolidated
financial
statement
or, in lieu thereof, the most current financial records and/or
tax returns
[
of the permit holder or, if not available, of the
parent corporation
];
(6)
(No change.)
[
(7)
the register run made at the close
of the preceding quarter for unmatured contracts, which runs shall be retained
for a period of three years;
]
(7)
[
(8)
] all examination reports
made by the department within the past three years;
(8)
[
(9)
] all trust agreements
approved by the department within the past three years and all trust agreements
that are still active
, including trustee fee schedules covering deposited
funds for the last three years
;
(9)
[
10
] all investment plans and
reports submitted to the department within the past three years and all such
plans and reports that apply to active trust funds;
(10)
[
11
] all preneed abandoned
property reports filed with the department and the [
Texas
] State
Comptroller of Public Accounts
[
Treasurer
] within the past
three years;
(11)
[
12
] records of the trustee/depository,
balanced at least quarterly
to the total of the control ledger and the
principal of the individual ledgers
, reflecting at a minimum all savings
account statements, certificate of deposit records (both principal and interest),
and/or trust statements for the past three years;
and
[
(13)
a listing of investments that, for
the past three years, do not meet the criteria established in Finance Code,
§154.258, updated at least quarterly; and
]
(12)
[
(14)
] all correspondence
with the department within the past three years,
including but not limited
to all transfer of funds approval letters issued by the department
.
(c)
Individual files.
(1)-(2)
(No change.)
(3)
Each file pertaining to a matured contract must be
retained for three years. Each such file must contain copies of all documents
required for an outstanding contract, a completed department withdrawal form
or evidence of department withdrawal approval, [
where required,
]
and a computation of earnings withdrawal, if applicable, unless computation
procedures are otherwise documented in the general file. Each matured contract
file must also contain [
a copy of
]:
(A)
the
original or copy of the completed at-need
[
at need
] contract or
funeral purchase agreement or an
itemization of services performed and merchandise transferred
signed
by the decedent's personal representative
; or, if the preneed funeral
contract relates only to the opening and closing of a grave, the cemetery
interment order
, which must denote the balance due on the preneed contract,
if any, and any preneed discount
;
(B)
a
[
the
] certified death certificate
or a copy of a certified original death certificate
; and
(C)
if the service is performed by an entity other than the
permit holder or a permit holder related by common ownership,
a statement
from the purchaser or purchaser's representative requesting the delivery of
funds to the servicing funeral home
[
the certificate of performance
of contract services executed by the decedent's personal representative
]
and evidence of payment to the servicing funeral home [
e.g., a copy of
the payment check or check stub
];
(4)
Each file pertaining to a canceled contract must
be retained for three years. Each such file must contain copies of all documents
required for an outstanding contract
,
[
and
] a completed
departmental
[
department
] withdrawal form or evidence of
departmental
[
department
] withdrawal approval, [
where
required, and
] a computation of earnings withdrawal, if applicable,
unless otherwise documented in the general file
, and evidence of payment
of the cancellation benefit
. [
Each canceled contract file must
also contain a copy of:
]
[
(A)
the purchaser's original notice of cancellation;
and
]
[
(B)
evidence of payment of the cancellation
benefit, e.g., a copy of the payment check or check stub.
]
(d)
Other records. Each permit holder subject to this section
must
[
shall
] maintain the following records regarding its
prepaid funeral benefits operations in hard-copy form
,
or on microfiche
or in an electronic database from which they may be reasonably retrieved in
hard-copy form:
(1)
an historical
contract register
, maintained
either chronologically or by contract number,
indicating:
(A)-(E)
(No change.)
(F)
final disposition of the contract
, including notations
as to whether the contract is matured or canceled, the date of withdrawal
from the depository, and the amount of funds withdrawn; or, in lieu thereof,
a record separate from the register, listing matured and canceled contracts
for the examination period and setting out the contract number, contract purchaser,
date of withdrawal from the depository, and amount of the withdrawal;
(2)-(4)
(No change.)
(5)
a control ledger for all purchasers, balanced at least
quarterly to the
principal total and contract count total of the
individual ledgers and
in total
to the records of the trustee/depository,
reflecting:
(A)
the
net
cumulative total of
outstanding
contracts [
issued, matured and canceled
];
(B)-(G)
(No change.)
(e)-(h)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 14, 1999.
TRD-9903485
Everett D. Jobe
General Counsel
Texas Department of Banking
Earliest possible date of adoption: July 25, 1999
For further information, please call: (512) 475-1300