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§ 12-914. Surety bond requirements

West's Annotated Code of MarylandFinancial InstitutionsEffective: June 1, 2017

West's Annotated Code of Maryland
Financial Institutions
Title 12. Miscellaneous Institutions and Activities
Subtitle 9. Maryland Debt Management Services Act (Refs & Annos)
Effective: June 1, 2017
MD Code, Financial Institutions, § 12-914
§ 12-914. Surety bond requirements
Surety bond filed with application for new license
(a) With the application for a new license, an applicant shall file a surety bond with the Commissioner.
Requirements of surety bond
(b)(1) The bond shall run to the Commissioner, as obligee, for the benefit of:
(i) The State; and
(ii) Any consumer who is injured by a violation of this subtitle or a regulation adopted under this subtitle committed by a licensee or an agent of a licensee, including an agent managing a trust account.
(2) The bond shall be:
(i) In an amount not less than $10,000 and not more than $1,000,000, as set by the Commissioner;
(ii) Issued by a surety company that:
1. Is authorized to do business in the State; and
2. Holds a certificate of authority issued by the Maryland Insurance Commissioner; and
(iii) Conditioned that the licensee and its agent shall comply with all State and federal laws and regulations governing the business of providing debt management services.
(3) The liability of the surety:
(i) Shall be continuous;
(ii) May not be aggregated or cumulative, whether or not the bond is renewed, continued, replaced, or modified;
(iii) May not be determined by adding together the penal sum of the bond, or any part of the penal sum of the bond, in existence at any two or more points in time;
(iv) Shall be considered to be one continuous obligation, regardless of increases or decreases in the penal sum of the bond;
(v) May not be affected by:
1. The insolvency or bankruptcy of the licensee or its agent;
2. Any misrepresentation, breach of warranty, failure to pay a premium, or any other act or omission of the licensee or its agent; or
3. The suspension of the licensee's license;
(vi) May not require an administrative enforcement action by the Commissioner as a prerequisite to liability; and
(vii) Shall continue for 3 years after the later of the date on which:
1. The bond is canceled; or
2. The licensee, for any reason, ceases to be licensed.
(4)(i) A bond may be canceled by the surety or the licensee by giving notice of cancellation to the Commissioner.
(ii) Notice under subparagraph (i) of this paragraph shall:
1. Be in writing; and
2. Be sent by certified mail, return receipt requested.
(iii) A cancellation of a bond under this paragraph is not effective until 90 days after receipt of a notice of cancellation by the Commissioner.
(5) A claim against the bond may be filed with the surety by:
(i) A claimant; or
(ii) The Commissioner for the benefit of a claimant or the State.
(6) If the amount of claims under a bond exceeds the amount of the bond, the surety:
(i) Shall pay the amount of the bond to the Commissioner for pro rata distribution to claimants; and
(ii) Is relieved of liability under the bond.
(7) The Commissioner may allow the amount of the surety bond to be reduced if the amount of the licensee's outstanding debt management services liabilities in the State is reduced.
(8) In setting the amount of the surety bond, the Commissioner shall consider:
(i) The financial condition and business experience of the applicant or licensee and the agent of the applicant or licensee;
(ii) For an applicant, the projected monthly and annual volume of debt management services to be provided in the State;
(iii) For a licensee, the average monthly and annual volume of debt management services provided in the State during the previous 12-month period;
(iv) The potential loss to consumers who remit funds to the applicant or licensee if the applicant or licensee becomes financially impaired; and
(v) Any other factor the Commissioner considers appropriate.
Reduction of penal amount of surety bond
(c) If the penal amount of a surety bond is reduced by payment of a claim or judgment, the licensee shall file with the Commissioner any new or additional surety bond in the amount that the Commissioner sets.
Waiver of requirement
(d) The Commissioner may waive the surety bond requirement under this section if the Commissioner determines that the volume of debt management services provided by the applicant or licensee does not warrant the need for a surety bond.
Penalties paid and collected from proceeds of surety bond
(e) A penalty imposed against a licensee under § 12-928 or § 12-929 of this subtitle may be collected and paid from the proceeds of a surety bond required under this section.

Credits

Added by Acts 2003, c. 374, § 1, eff. Oct. 1, 2003; Acts 2003, c. 375, § 1, eff. Oct. 1, 2003. Amended by Acts 2005, c. 574, § 2, eff. Oct. 1, 2005; Acts 2017, c. 479, § 1, eff. June 1, 2017.
MD Code, Financial Institutions, § 12-914, MD FIN INST § 12-914
Current through legislation effective through June 1, 2022, from the 2022 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
End of Document