Mission. About the Office of Financial Regulation

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2 Mission To protect the citizens of Florida, promote a safe and sound financial marketplace, and contribute to the growth of Florida s economy with smart, efficient and effective regulation of the financial services industry. About the Office of Financial Regulation The Florida Office of Financial Regulation (OFR) provides regulatory oversight for Florida s financial services industry. The OFR was created in 2003 as the result of the Cabinet Reorganization Act of Although the OFR is a relatively new agency, its beginnings as a banking, consumer finance and securities regulator date back to the mid-1800s with the creation of the former Comptroller s Office. The OFR reports to the Financial Services Commission made up of the members of the Florida Cabinet, Governor Rick Scott, Chief Financial Officer Jeff Atwater, Attorney General Pam Bondi and Agriculture Commissioner Adam Putnam. Financial Services Commission (Members: Governor, Attorney General, Chief Financial Officer, Commissioner of Agriculture) Office of Financial Regulation (OFR) Office of Insurance Regulation (OIR) 1

3 Commissioner Drew J. Breakspear Drew J. Breakspear brings more than 40 years of experience to the Office of Financial Regulation, having worked in the international banking industry and management consulting. He most recently served as Executive Vice President and General Auditor at State Street Corporation in Boston, joining the company in Previously, he worked as Senior Vice President and Director of Audit and Corporate Compliance Officer at First Nationwide Bank FSB in San Francisco, Vice President and Head of Consumer Services Audit at Citicorp/ Citibank N.A. in New York, and as a management consultant at Touche Ross & Company in New York. Mr. Breakspear is a respected expert on corporate governance, compliance and risk management. He is known for his acumen in corporate strategy, for his effectiveness in guiding audit organizations, and working with regulators globally. Mr. Breakspear received an MBA from the Harvard Business School and a bachelor s degree in Economics from the University of Witwatersrand. 2

4 Division of Consumer Finance The Division of Consumer Finance licenses and regulates the nondepository financial service industry and conducts examinations and investigations. Mortgage Loan Brokering, Origination & Servicing 1,889 Companies 1,404 Branches 16,092 Individuals Collection Agencies 1,506 Consumer Collectors Commercial Collectors Consumer Finance Companies 106 Companies at 293 Locations Retail Installment Sales 5,654 Companies 1,727 Branches Money Services Businesses Money Transmitters, Check Cashers, Foreign Currency Exchangers & Pay Day Lenders 1,262 Companies with an additional 49,681 Authorized Locations and Branches Title Loan Lending Currently there are no licensed title loan lending companies in Florida. Total 79,781 *As of June 30, 2013 Consumer Finance Trends 152% increase in pay day loans since regulation began in Nationwide, an average of 5.5% of adults have used a payday loan. Pew Research The delinquency rate for mortgage loans on one-to-four unit residential properties fell to a seasonally adjusted rate of 7.09 percent of all loans outstanding at the end of the fourth quarter of This is the lowest level since 2008, a decrease of 31 basis points (a basis point is 0.01%) from the previous quarter and 49 basis points from one year ago. - Mortgage Bankers.org 3

5 Division of Financial Institutions Through the Office of Financial Regulation, state-chartered financial institutions are licensed, examined and regulated to ensure that private funds deposited in Florida's state-chartered financial institutions are protected from potential loss due to failure or insolvency. Types Advantages of the State Charter The State of Florida offers unique advantages to financial institutions chartered in Florida. Lower cost Local knowledge of Florida markets More responsive to changes in local economies Direct access to regulators to develop practices to complement and meet industry expectations Able to evaluate local conditions and needs without having to transfer responsibility to other districts or authorities # State Assets (Millions) # Federal Assets (Millions) Banks 141 $ 55, $ 65,959 Credit Unions 72 $ 23, $ 24,092 International Bank Offices 29 $ 16,232 N/A N/A *As of June 30, 2013 Trusts 12 $ 101 N/A N/A Totals 254 $ 95, $ 90,051 4

6 Division of Securities The Division of Securities regulates the sale of securities and investment advice in, to or from Florida by firms (securities dealers, issuer dealers and investment advisers), branch offices and individuals affiliated with these firms to determine compliance with Florida law. Dealers 2,862 Investment Advisers 4,947 Branches 10,286 Stockbrokers 286,828 Total 304,923 *As of June 30, 2013 A Look at Fiscal Year Application Fees Collected = $19,392,294 Fines Collected = $2,117,521 About the Division The number of total registrants has risen by 21% in the last 10 years. The Division is the sole regulator of approximately 1,600 investment advisers domiciled in Florida with up to $100 million of assets under management. 5

7 Bureau of Financial Investigations The Bureau of Financial Investigations is a criminal justice agency that conducts complex investigations of the financial services industry and participates in joint investigations with local, state and federal law enforcement agencies. Fiscal Year Statistics Investigations Closed 170 Investigations Resulting in Enforcement Actions 46 Criminal Actions 35 Civil Actions 1 Administrative Actions 10 *Some investigations resulted in multiple actions Imprisonment Results 71 Total Defendants Convicted; 49 Received Prison Terms Years of Prison 294 Years of Probation Average loss to the victims per each defendant convicted was $2.7 million. The Bureau saw a 31% increase in the number of defendants convicted from fiscal year to

8 Overview of The Office of Financial Regulation Fiscal Year Full-Time Employees 357 Division of Consumer Finance 92 Division of Financial Institutions 114 Division of Securities 96 Bureau of Financial Investigations 39 Executive Direction 16 Total Budget $36,566,126 Total Registrants 384,958 *As of June 30, 2013 Regional Offices located throughout Florida Tallahassee Orlando Tampa West Palm Beach Miami 7

9 OFR Accomplishments from Telework Program - The OFR implemented a telework program to support a reduction in leased office space. By implementing a telework program, the OFR is able to maintain an effective presence in major cities without a brick and mortar office. The program saves more than $500,000 annually and is a template program for other state agencies. The OFR received a Prudential-Davis Productivity Award for this program. Increased Savings to the Taxpayers through a Renegotiated Contract - The OFR was awarded the Governor s Savings Award and a Prudential-Davis Productivity Award for the renegotiation of the REAL contract. The OFR was able to renegotiate its contract and retain the high level of services needed to meet the agency s needs for its core mission of licensing and regulation. The result is a savings of more than $3.9 million dollars over a four year period, which reflects more than 10 percent of the OFR s annual budget. Increase in Enforcement Actions - A 25% increase in the number of cases resulting in enforcement actions from fiscal year to by improving the process to determine cases to pursue. Improved Application Process - On average, for all applications approved by OFR, the days to approve a license decreased from 22 days in fiscal year to 5 days in Complaint Resolution Efficiency - The OFR has experienced a 50% decrease in the time it takes to handle a complaint by developing agency wide process improvements. 8

10 What you need to know about Financial Fraud 8 in 10 investment fraud victims, who admitted being defrauded, were introduced to the fraudster through a friend or family member. 1 in 4 investment fraud victims were contacted by the fraudster via the telephone. Investment fraud victims were more likely to be between years old, male, married, wealthier, more financially literate, more open to sales pitches used by con men, more likely to have invested in highrisk investments and not likely to have checked the background of a broker before investing. Over 80 percent of adults, age 40 and older, have been solicited to participate in potentially fraudulent schemes and over 40 percent cannot identify some of the classic red flags of fraud. 9

11 Preventing Financial Fraud The OFR encourages all Florida citizens to take measures to protect themselves. Verify the license of the company or individual with whom you plan to do business. Seek a second or third party opinion. Inquire with multiple professionals and find one who listens and understands your financial goals. Get everything in writing. Ask for brochures or written information that fully explains the product so you can more clearly see the products that are being offered. Ask questions on anything you don t understand. Be sure you fully understand the products being offered before you invest or buy. Consider any investment carefully and completely beforehand. Don t be afraid to sleep on it before making a decision. Don t rush or be rushed. Conduct a patient due diligence process in making your decisions. Be wary of products that sound too good to be true. Keep in mind the old adage, If it sounds too good to be true, it probably is. File a complaint if you have fallen victim to fraud or if you suspect questionable business practices. Consumers can file a complaint online at or call the OFR at (850)

12 FLORIDA OFFICE of FINANCIAL REGULATION 200 East Gaines Street Tallahassee, Florida (850) st Edition October 2013 Smart, Efficient and Effective Regulation 11