State Controller’s Office Articulates Overbroad Interpretation of Limit on Account Fees

General information

The State Controller’s Office (SCO) is responsible for the handling of assets and properties that escheat to the state, including funds in bank accounts. In a recent letter to a financial institution following an inquiry, the SCO took the position that limits on service charges imposed on accounts because of inactivity are prohibited both after and before the accounts are subject to escheat (upon the running of three years of inactivity, as defined). If any such charges are imposed, then they must be returned to the account when the account escheats.

Ted Kitada, senior company counsel with Wells Fargo Bank, prepared an analysis and rebuttal of the SCO’s position. See CBA’s Regulatory Compliance Bulletin and the SCO’s letter.