West Virginia Code of State Rules Agency 106 - Banking
West Virginia Code of State Rules – Agency 106: Banking
Agency 106 is the set of administrative rules governing banking and financial institutions in West Virginia. These rules are issued by the Commissioner of Financial Institutions under statutory authority from the West Virginia Legislature (primarily under Chapter 31A, Banks and Banking).
The purpose of Agency 106 is to:
Regulate banks, consumer lenders, mortgage lenders, and money transmitters.
Protect consumers from unfair or unsafe financial practices.
Ensure the safety and soundness of financial institutions.
Provide standards for licensing, operations, reporting, and enforcement.
Agency 106 is organized into multiple Series, each covering a distinct regulatory area.
1. Key Series of Agency 106
Series 106‑01: Consumer Credit & Protection
Governs how consumer credit transactions must be handled.
Establishes how finance charges, interest, and rebates are calculated.
Requires lenders to provide accurate disclosure of terms to consumers.
Series 106‑03: Operations of State-Chartered Financial Institutions
Sets standards for management and operational practices.
Applies to state-chartered banks and savings institutions.
Series 106‑04: Regulated Consumer Lenders
Establishes licensing and operational rules for consumer lenders.
Limits on interest rates and fees may be specified here.
Series 106‑05: Residential Mortgage Lenders, Brokers, and Loan Originators
Licensing requirements for mortgage brokers and loan originators.
Standards for advertising, disclosures, and documentation.
Background checks required for individuals working in mortgage lending.
Series 106‑09: Legal Lending Limits
Defines maximum amounts a bank may lend to a single borrower or related group.
Sets exceptions for certain types of loans like commercial paper.
Series 106‑12: Community Reinvestment
Requires banks to meet the credit needs of their communities.
Aligns with the federal Community Reinvestment Act in principle.
Series 106‑19: Reverse Mortgage Loans
Regulates how reverse mortgages are made.
Commissioner may suspend or revoke a license for violations such as misrepresentation or failure to disclose fees.
Series 106‑21: Fintech Regulatory Sandbox
Allows fintech companies to test innovative financial products under supervision.
Ensures compliance with safety and consumer protection standards.
Series 106‑23: Money Transmission Services
Regulates licensing, permissible investments, and solvency requirements for money transmitters.
2. Common Themes Across Agency 106 Rules
Consumer Protection: Rules require disclosures, limit fees, and protect against abusive lending practices.
Operational Standards: Institutions must maintain proper management, reporting, and safe operational practices.
Licensing & Oversight: Businesses must obtain proper licenses, and violations may lead to fines, suspension, or revocation.
Due Process: Rules often provide for administrative hearings before the Commissioner takes enforcement actions.
3. Enforcement and Penalties
Violations of Agency 106 rules may result in:
Administrative fines
Suspension or revocation of license
Cease and desist orders
Corrective action plans for unsafe or unsound practices
The Commissioner may act against institutions for conduct demonstrating gross incompetence or dishonesty, such as misrepresentation to consumers, charging unauthorized fees, or failing to maintain records.
4. Relevant West Virginia Case Law
While courts have not interpreted every specific Agency 106 provision, related principles have been established:
A. Bank of Wheeling v. Morris Plan Bank & Trust Co. (1971)
The Court held that administrative remedies must be exhausted before filing suit.
Meaning: Banks or lenders must first go through the Commissioner’s procedures before seeking judicial relief.
B. Citizens Bank v. WV Board of Banking & Financial Institutions (1977)
Agency actions (like granting or denying licenses) must include adequate factual findings.
Courts review whether the agency followed proper procedures and made reasonable determinations.
C. Regulatory Deference
Courts generally defer to agency interpretations of statutes and rules unless clearly unreasonable.
This means the Commissioner’s interpretation of Agency 106 rules carries strong weight in disputes.
5. Practical Implications for Banks and Lenders
Compliance is mandatory: Institutions must know which series of rules apply to their operations.
Consumer protection: Clear disclosures, proper accounting, and adherence to lending limits are critical.
Regulatory oversight: Institutions can expect routine examinations and must be prepared for administrative hearings if violations occur.
Judicial review: Courts focus on whether the agency followed proper procedures and whether the findings are supported by facts.
Summary:
Agency 106 is the backbone of banking regulation in West Virginia. It ensures consumer protection, financial stability, and responsible lending practices, while providing procedural safeguards for institutions. Violations can result in serious administrative penalties, making compliance with licensing, disclosure, lending limits, and operational standards essential.
RELATED Blog
comments