Bill
H 5538
The Guarantee Banking Act bans discriminatory denial of key banking services by large institutions, requires specific adverse-action explanations, and allows remedies for harmed cu
Title: Guarantee Banking Act
Purpose
- Establishes the Guarantee Banking Act to promote fairness and transparency in banking by prohibiting discrimination in the provision of certain financial services and detailing compliance, remedies, and limits related to adverse actions by large financial institutions.
Key definitions (Section 34-47-10)
- Adverse action: A decision by a financial institution to decline, terminate, or restrict full and equal access to covered financial services.
- Discriminate in the provision of covered financial services: Taking an adverse action based on protected characteristics or activities, including:
- Exercise of religion (First Amendment protections)
- Speech, expression, or association (protected by First Amendment or privacy protections)
- Participation in lawful economic activity
- Animus toward a person based on the above factors
- Attempts to induce an adverse action through others (gain or avoid loss to influence the institution)
- Financial institution: Large entities (a bank with assets > $100 billion or a major payment processor/card network with >$100 billion in annual transactions) and includes parent/affiliate/subsidiary entities.
- Covered financial service: Banking services such as depository accounts (checking, savings, NOW), money transmission (payments, ACH, card networks), and credit (personal, mortgage, business, card). Excludes insurance and certain securities-related activities.
Scope note
- Applies to large financial institutions and associated entities; non-covered institutions are not bound by these provisions.
Key provisions (Section 34-47-20 through 34-47-90)
1) Right to a statement of specific reasons (34-47-20)
- When adverse action occurs, the affected person may request a detailed statement of the specific reasons within 90 days.
- Request methods: via phone, mail, or email.
- Institutions must provide the statement within 30 days, using mail and electronic mail when possible.
- The statement must specify the principal reason(s). Blanket references to internal standards or generic scoring are insufficient.
- If the institution already provides an adverse-action statement under the Equal Credit Opportunity Act (ECOA), it can satisfy this requirement if it also describes any listed criteria that factored into the decision.
2) Prohibitions on discrimination and collaboration (34-47-30)
- Prohibits discrimination in providing financial services.
- Prohibits agreement or coordination with others to engage in discriminatory activity.
- Prohibits providing false or misleading information in the required adverse-action report.
3) Good-faith actions are allowed (34-47-40)
- Permits certain actions in good faith and not motivated by animus, including:
- Changing terms of an account as agreed with the customer
- Actions relating to inactivity, default, or delinquency
- Refusing services due to law or the institution not offering the service
- Decisions based on legitimate business factors (profitability, compliance with laws/regulations, safety and soundness), provided these are impartial and not used to target individuals
4) Remedies and enforcement (34-47-50 to 34-47-70)
- Violations are treated as unfair or deceptive acts or practices.
- Civil actions: Individuals harmed can seek:
- Actual damages or $10,000 per violation, whichever is greater; if willful, up to triple damages or $30,000 minimum, plus reasonable attorney’s fees and costs.
- Preventive relief (injunctions, restraining orders, etc.)
- Attorney’s fees and costs
- If the plaintiff is found to have filed in bad faith, the defendant may recover reasonable attorney’s fees and costs (34-47-70).
5) State and local government role (34-47-80)
- The State and its political subdivisions may not impose penalties or requirements identical or substantially similar to this chapter on financial institutions not covered by the act, unless mandated by federal or state law.
6) Construction and interpretation (34-47-90)
- The chapter should be construed to broadly protect First Amendment rights and related protections, favoring expansive interpretation to safeguard conduct, opinions, and beliefs.
Effective date
- The act takes effect upon approval by the Governor.
Who is affected
- Primarily large financial institutions and their parent/affiliate/subsidiary entities that process substantial banking and payment transactions.
- Individuals who are customers facing adverse actions related to covered financial services, and who wish to obtain explanations and pursue remedies.
Potential impacts
- Increased transparency: Institutions must provide specific reasons for adverse actions and may be required to supply additional documentation if ECOA disclosures are insufficient.
- Protections for speech, religion, and economic activity: The act explicitly links adverse-action prohibitions to First Amendment-protected activities and lawful economic behavior, subject to the definitions provided.
- Remedies framework: Establishes civil damages, injunctive relief, and attorney’s fees, creating incentives for compliance and potential recourse for harmed individuals.
- Compliance considerations: Large financial service providers would need processes to document criteria used in decisions and ensure non-discriminatory practices, with potential audits or enforcement by the state.
Procedural notes
- Introduced and referred to the Committee on Labor, Commerce and Industry on April 15, 2026.
- Includes a broad sponsor list and co-sponsors.
Overall takeaway
- The Guarantee Banking Act seeks to curb discriminatory practices by large financial institutions in providing depository, payment, and credit services, mandate clearer explanations for adverse actions, and provide legal remedies for individuals harmed by violations, while preserving permissible business considerations and adherence to applicable laws.
Compiled from official sources — confirm details with the bill’s official record.
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