Could South Carolina’s financial institutions board order a preneed funeral contract seller to cease and desist in 2005?

Plain-English summary

In 2005, South Carolina’s Commissioner of Banking asked whether the State Board of Financial Institutions could issue a cease-and-desist order against a company violating the law on preneed funeral contracts. The Attorney General said he found no statute or regulation granting that power for the described violation. An agency needed legislative authority to issue such an order.

The chapter gave the board powers to investigate, subpoena, audit, hold hearings, and enforce its provisions. It also directed the board to report certain unlicensed-provider violations to the funeral service board or law enforcement authorities. The AG contrasted those powers with other laws that expressly authorized cease-and-desist orders for different businesses.

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could the board issue a cease-and-desist order for this preneed contract violation?
The AG said he was unaware of any authority for that order under the chapter or applicable regulations.

Did the board have any enforcement or investigation role?
Yes. The opinion quoted powers to investigate, require records, hold hearings, and report certain violations.

Why did the AG compare other financial laws?
Those laws explicitly granted cease-and-desist authority in specified settings. The AG found no comparable grant for preneed funeral contracts.

Background and statutory framework

The opinion applied the principle that a state board must derive coercive order power from legislation. It examined the preneed funeral contract chapter’s list of board powers and distinguished express order authority in other chapters.

Citations and references

• Section 32-7-110: board powers for preneed funeral contracts quoted in the opinion.

Official title

Questioning the authority of the State Board of Financial Institutions (“the Board”) to issue an order to cease and desist against a company found by your office to be in violation of Chapter 7 of Title 32 of the State Code dealing with the sale of preneed funeral contracts.

Requester

The Honorable Louie A. Jacobs, Commissioner of Banking

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/january-24-2005/
• Original PDF: https://www.scag.gov/wp-content/uploads/2011/03/05jan24-Jacobs.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
HENRY McMAsTER
ATTORNEY GENERAL

January 24, 2005

(
The Honorable Louie A. Jacobs
Commissioner of Banking
State of South Carolina
Board of Financial Institutions
P. 0., Box 12549
Columbia, South Carolina 292

I
I

Dear Mr. Jacobs:
In a letter to this office you questioned the authority of the State Board of Financial Institutions ("the Board") to issue an order to cease and desist against a company found by your office to be in violation of Chapter 7 of Title 32 of the State Code dealing with the sale of preneed funeral contracts. Please be advised that based upon my review, I am unaware of any authority for the Board to issue a cease and desist order in the circumstances referenced. As referenced above, the provisions of S.C. Code Ann.§§ 32-7-10 et seq. deal with the sale ofpreneed funeral contracts in this State. The authority of the Board with regard to preneed funeral contracts is set out in Section 32-7-110 which provides as follows:

I

L

I

(A) The board shall enforce the provisions of this chapter and has the power to make investigations, subpoena witnesses and documents, require audits and reports, and conduct hearings as to violations of any provisions, and to promulgate such regulations as are necessary to carry out the provisions of this chapter. (B) Upon its own initiative or upon receipt of a complaint, the board must investigate any funeral home, funeral director, individual, or business the board has reason to believe is acting as a provider without a license. In order to conduct its investigation, the board must review the books, records, and accounts of: (1) any funeral home or funeral director licensed by the State Board of Funeral Service even if the funeral home or funeral director is not licensed to sell preneed funeral contracts, or (2) any individual or business the board has reason to believe is acting as a provider without a license. If the board discovers that a violation of this chapter has occurred by any funeral home, funeral director, individual, or business that is not licensed to sell preneed funeral contracts, the board must report the violation to the State Board of "')

4V/~1

R.EMBE!ff CA>ENNJS, BUIWING
.1/:

~

,_

~' 7'*'7r:r/

•

POST OFFICE Box 11549

•

COLUMBIA, S.C. 29211-1549

•

TELEPHONE: 803-734-3970

•

FACSIMILE: 803-253-6283

[

The Honorable Louie A. Jacobs
Page2
January 24, 2005

Funeral Service or to the Attorney General, a circuit solicitor, or an appropriate law enforcement agency.

I
I

I

L

A prior opinion of this office dated August 30, 1994 determined that a state agency or state official would have to derive authorization to issue an order to cease and desist from a legislative enactment. Based upon my review, there is no statutory authority or regulation which grants the Board the authority to issue a cease and desist order in circumstances dealing with preneed funeral contracts. The absence of such authority is in contrast with other statutory provisions which do grant the Board the authority to issue cease and desist orders in specified situations. See, e.g., S.C. Code Ann. §34-26-210(3) (authority to issue cease and desist orders against credit unions in specified circumstances); §34-30-520(B) (authority to issue cease and desist orders against savings banks in specified circumstances); § 34-39-220 (authority to issue cease and desist orders with regard to deferred presentment services); § 34-41-100 (authority to issue cease and desist orders against persons engaged in check cashing services). Moreover, I am unaware of any statutory authority granting State boards and agencies the authority to issue cease and desist orders generally unless specifically authorized. See, e.g., S.C. Code Ann. § 34-36-40(B) (authority for the Department of Consumer Affairs to order a loan broker to cease and desist in specified circumstances); § 23-45-150 (authority for the State Licensing Board for Contractors to issue a cease and desist order in association with violations of the State Fire Protection Sprinkler Systems Act);§ 27-32-190(B)(5) (authority for the State Real Estate Commission to issue a cease and desist order in the referenced circumstances); § 3 7-16-70( 1) (authority for the Department of Consumer Affairs to issue a cease and desist order against a prepaid legal services company).

If there are any questions, please advise.
Sincerely,

Charles H. Richardson
Senior Assistant Attorney General
REVIEWED AND APPROVED BY:

,Ldz~b,~

Robert D. Cook
Assistant Deputy Attorney General