Illinois Gov. Pat Quinn signed into law House Bill 1572 that amends the state’s Credit Union Act, which is expected to establish a fair and consistent civil penalty assessment process, according to the Illinois Credit Union League.
The act’s new amendment authorizes the state’s Department of Financial and Professional Regulation to impose civil penalties but only when the DFPR secretary reasonably determines through “objective facts and an accurate assessment of accurate legal standards” when a credit union violates the Credit Union Act, DFPR orders, or participates in any unsafe or unsound practices that led to financial loss or created a reasonable probability that a substantial financial loss will result.
Credit union directors, officers and committee members also will be held responsible if the DFPR secretary determines through the newly established civil penalty assessment process that a violation was caused by their “willful misconduct or material breach of fiduciary duty,” according to the new amendment.
“In the short time since the civil penalty process has been in place, interpretive issues have arisen regarding key operative terms,” ICUL said in a statement. “HB 1572 addresses those issues by adding substantive due process criteria to provide objective standards of materiality and quality assurance and a cure opportunity before any assessment of a civil penalty.”
The new amendment also authorizes the DFPR secretary to assess civil penalties if the financial loss or probable financial loss is equal to or greater than either one percent of the credit union’s total assets or one percent of the credit union’s total gross income.
The DFPR may also post its civil penalty orders on its website, but only after the final administrative decision is made and “adjudicated to finality.”
Gov. Quinn signed the bill into law on Aug. 16 and it became effective immediately, according to the Illinois league.