Relating to limitations on the termination of banking services by certain financial institutions.
HB 4778 would create a new Chapter 601A in the Texas Business & Commerce Code to limit when certain Texas-chartered financial institutions may terminate a customer’s bank account, line of credit, or other banking instrument. The bill requires advance notice and a stated reason before termination, and generally gives the customer at least 30 days to move their accounts voluntarily. It also allows a customer to appeal a termination notice to the Texas Department of Banking, which would review whether the termination complies with the chapter and could order the institution to reverse the termination if it is not authorized.
The bill applies to state-chartered banks, savings and loan associations, state savings banks, credit unions, trust companies, and other lenders formed under Texas law that make loans only to Texas residents or Texas-organized businesses. It exempts certain situations from the 30-day notice period, including dormant or zero-balance accounts, persistent overdrafts or habitual delinquency, and cases where the institution believes criminal activity is involved. The bill also authorizes declaratory and injunctive relief, plus attorney’s fees, after a Department of Banking determination, while preserving any federal-law limits on liability.
If enacted, HB 4778 would add a new regulatory framework governing account closures and credit termination by covered Texas financial institutions, shifting some control over termination decisions to the Texas Department of Banking and the Finance Commission. It would require institutions to document reasons for termination, provide notice, and potentially delay closures, while creating a formal administrative appeal process and limited private enforcement remedies. The bill would affect state-chartered banks, credit unions, savings institutions, trust companies, and certain other Texas lenders, but would not override protections or limits already provided under federal law.
The available context shows the bill was referred to the House and Senate Pensions, Investments & Financial Services committees, but there are no recorded committee transcripts or votes in the provided materials. Based on the bill’s structure, it appears aimed at protecting customers from abrupt termination of banking services while preserving exceptions for risk, delinquency, and suspected criminal conduct. Because no debate or vote history is included, the overall sentiment cannot be measured directly from the record provided.
The main points of potential contention are the bill’s restriction on financial institutions’ discretion to close accounts or terminate credit relationships, and the new administrative review process that could require reversals of termination decisions. Supporters would likely emphasize consumer protection, notice, and due process for customers, while financial institutions may object to added compliance burdens, delayed risk management, and the possibility of appeals and litigation. The exceptions for dormant accounts, overdrafts, delinquency, and suspected criminal activity suggest an attempt to balance those concerns, but the scope of the Department of Banking’s oversight and the availability of attorney’s fees could still be disputed.