A new Florida law provides an avenue of recourse for bank customers who believe they were denied financial services on the basis of their political opinions, religious beliefs, lawful ownership of guns or involvement in fossil fuel-based energy production.
The law, which covers both state-chartered and federally chartered financial institutions operating in the Sunshine State, sets up a potential legal clash over state and federal regulatory authorities. It is part of a broader backlash in red states to corporations' attention to environmental, social and governance matters.
Under the law, consumers can submit a claim with the Florida Office of Financial Regulation concerning a canceled account or loan denial. The financial institution will then have 90 days to submit a response, including information about any alleged suspicious activity by the customer. The Office of Financial Regulation will investigate the claim.
Banks will also be required to submit an annual attestation of their compliance with the new law, which, if violated, could result in a penalty of perjury.
Supporters say that the law, which took effect on Monday, could put power in the hands of bank customers, ensuring that their accounts aren't canceled without full transparency by financial institutions.
"We are not going to allow big banks to discriminate based on someone's political or religious beliefs," Florida Gov. Ron DeSantis, who signed the bill on May 2, said in a press release.
At a May press conference, DeSantis said that a driving force for the legislation was the termination of certain organizations' accounts by banks and fintechs. He pointed specifically to the experiences of the conservative groups
DeSantis also said that the law would "enhance Florida's protection against ESG activism."
State Rep. Bob Rommel, a Republican who supports the law, said that the measure will allow individuals who feel that they have been terminated without just cause to get an explanation from the financial institution.
Rommel, who chairs the Florida House Commerce Committee, previously authored Florida House Bill 3, which prohibits financial institutions from considering the ESG practices of their customers. He said that the latest law ensures that financial strength is the sole factor that banks consider.
"We just want to make sure people have access to capital," Rommel said.
Under House Bill 3, which took effect last year, terminating an account on the basis of certain factors is considered an unsafe or unsound banking practice in Florida. Those reasons include: the person's political opinions, speech or affiliations; the person's religious beliefs or affiliations; and any factor that is not a quantitative, impartial and risk-based standard.
The 2023 Florida law also specifically cites gun ownership and involvement in fossil fuel-based energy production as factors that banks are not supposed to consider.
Other Republican-led states have been moving in the same direction as Florida. In
During the Trump administration, the Office of the Comptroller of the Currency sought to implement a "fair access" rule, which would have punished large banks for terminating services to companies in politically disfavored industries.
That effort drew opposition from
The OCC's fair-access rule, which was hatched under then-Comptroller Joseph Otting,
Because the new Florida law covers national banks that operate in the state, it raises questions about the intersection of state powers and federal powers.
The Supreme Court ruled unanimously last month that the National Banking Act preempts any state law that "prevents or significantly interferes with the national bank's exercise of its powers."
The OCC has traditionally been a staunch defender of the powers of national banks when states seek to limit them.
In response to an inquiry about the new Florida law, the OCC said in an emailed statement that it is aware that "some states have passed laws or taken other actions that purport to apply to national banks" and federal savings associations.
"We are carefully monitoring the proliferation of competing and potentially inconsistent requirements," the OCC said.
Some financial institutions believe that the Florida law could throw a wrench into their investigations of suspicious customer activity. They maintain that if they notify customers of the nature of their investigations before they conclude, it could potentially compromise cases and lead to the obfuscation of evidence by fraudsters or money launderers.
The Florida Bankers Association said that the new state law "raises several challenges and concerns, particularly as it relates to conflicting legal requirements between state and federally chartered banks, including requirements under the Bank Secrecy Act and federal anti-money laundering laws."
"These issues were raised during the legislative session and those conversations had some impact on the law the Legislature ultimately passed," the group said in an emailed statement.
The new Florida law could soon become the subject of litigation in federal court, where any conflict between state and federal authorities could eventually be settled.
Rommel said that Florida will stand firm in support of its law.
"If the federal government decides to sue, that's fine. I think we can defend ourselves." he said. "If the federal agency decides to push harder, we will stand and protect our citizens."
