Large financial institutions would explain certain service denials

A covered financial institution would provide a specific written explanation when a customer requests the reasons for an adverse action. This covers South Carolina residents and businesses facing refusal, restriction, or termination of covered accounts, payment services, or credit from banks with more than $100 billion in assets or payment companies processing more than $100 billion annually. The customer must request the explanation within 90 days after receiving notice and identify the alleged adverse action and the legal basis claimed. The institution must send the explanation by mail or email within 30 days after receiving the request, unless federal law prohibits or requires something else. The explanation must identify the main reason and describe any listed religious, speech, association, business-sector, or similar factor that influenced the decision. A statement that only cites internal policies or a credit score is not enough. Federal credit and reporting-law notices may satisfy the requirement if they include the required information. This requirement would begin six months after the Governor signed the act, on December 30, 2026.

A covered financial institution would be barred from denying, restricting, or ending covered financial services for specified religious, speech, association, or non-impartial risk-related reasons. The rule covers large banks and payment companies serving South Carolina residents or businesses and applies to deposits, money transfers, and credit, but not insurance or securities services. The institution also could not agree, conspire, or coordinate through another person or group to engage in prohibited conduct. The rule does not bar service denials for fraud, criminal conduct, incitement of unlawful actions, or constitutionally unprotected expression. The text also protects decisions based on impartial, quantitative, risk-based standards. The prohibition would apply beginning December 30, 2026, six months after the Governor signed the act.

A covered financial institution could take specified good-faith actions without violating the chapter, while the state and local governments could not impose substantially similar rules on institutions outside the chapter. Exceptions cover agreed account changes, inactivity or delinquency, legal restrictions, unavailable services, profitability, regulatory compliance, and safety or soundness decisions. The listed actions must be made in good faith and not because of animus or a desire to discriminate. Profitability decisions cannot be based on trying to gain from or avoid harm imposed by another person because the institution served a customer. The state or a local government could impose similar requirements on uncovered institutions only when federal or state law requires it. These exceptions and government limits would apply beginning December 30, 2026, six months after the Governor signed the act.