Update 11/18/2011: I'm happy to report that my problem with Wells Fargo has been resolved. I have the details in this new blog post.
I thought it would be useful for me to describe a problem that I'm currently having with Wells Fargo. I haven't mentioned it in the past since it deals with a private matter, but I decided it was worth disclosing since it may be helpful to others. Plus, I'm always open to suggestions, and I know many of my readers have quite a bit of banking experience.
In addition to providing a lesson, the problem also shows an issue that I've seen with mega banks. The issue is when a branch manager is too quick to pass problems to the corporate department instead of taking responsibility of the problem. Once the manager receives the decision from the corporate office, it's declared as the final decision, and nothing more can be done.
Quick Summary of My Wells Fargo Problem
I have a CD receipt from Wells Fargo showing me as the beneficiary of the CD. The owner of that CD has passed away, and I'm trying to access the account. Wells Fargo made a mistake, and I'm not listed as the beneficiary in their system. In addition, they claim the CD receipt that was provided by a Wells Fargo banker when the CD was opened is invalid. Thus, they require a court order which according to my attorney will cost at least $250. I've filed a complaint with Wells Fargo's regulator, the Office of the Comptroller of Currency (OCC). Wells Fargo continues to maintain that the receipt is invalid. The OCC is currently waiting on information from Wells Fargo.
In September 2010, my dad opened a CD at Wells Fargo. He received from the Wells Fargo banker a CD receipt. This receipt was a two-page document with all of the account information and CD terms. The second page consisted of a form for the names of payable-on-death (POD) beneficiaries. The banker had written my name, and my dad had signed it.
My dad passed away at age 88 in March of this year after experiencing severe heart problems. That was the family matter that I had mentioned in March.
My dad had been investing in bank CDs for the last 30 years. Fortunately, he was careful to ensure all of his bank accounts had beneficiaries (either me or my two brothers). The nice thing about bank account beneficiaries is that it avoids probate. When a beneficiary is listed on a bank account, the beneficiary can access the account after the account owner dies. The beneficiary just needs to show the bank his ID and a certified copy of the death certificate. No court document is necessary.
My brothers and I had no problems accessing all of my dad's CDs except for this one Wells Fargo CD which had me as the beneficiary. Wells Fargo's systems did not show anyone as the beneficiary of that CD.
In addition to being careful about specifying beneficiaries on his accounts, my dad was also careful in keeping the documents from the banks. He had sent me a copy of that Wells Fargo receipt showing me as the beneficiary. I thought that would convince the branch manager that it was their mistake. However, that was not the case.
When I first visited the branch, the manager wasn't there, so one of the bankers assisted me. Since I wasn't listed in the system as the beneficiary, the banker wasn't sure what to do. He called Wells Fargo's legal department and faxed them the CD receipt. After discussing the issue with the legal department, the banker informed me of the legal department's decision that the receipt was not valid.
Wells Fargo's legal department claimed the receipt was only for certain states and it should not have been used for Florida. I informed them that it was the Wells Fargo banker who generated this document and gave it to my dad. If the banker didn't know the receipt was valid, how should they expect the customer to know? I spoke with the branch manager, and the manager took the same position. They view the CD as having no beneficiary. To access the account I need a court order. According to my attorney, I need to go through a summary administration process which will cost at least $250.
Since Wells Fargo is a national bank regulated by the OCC, I filed a complaint using the online form at Helpwithmybank.gov. I submitted the complaint in July.
It appears the first thing the OCC does when they receive a complaint is to forward the complaint to the bank. I received my first letter in response to my OCC case from a Wells Fargo correspondence specialist in August. The letter asked for a copy of the document. I mailed them the copy of the document and made it clear that it was the Wells Fargo banker who gave this document to my dad.
Later in August I received the second letter from the Wells Fargo correspondence specialist. Here's an excerpt of the reply:
Thank you for providing a copy of the POD/ROS Designation for Certificate of Deposit (CD) Accounts. A review of the documentation you provided confirms this document is not valid for the CD account in question. The documentation is only applicable for personal CD accounts opened in the state of North Carolina or Virginia.
I then mailed the OCC a letter stating that I was in disagreement with the bank's reply. Here's an excerpt of this letter:
This documentation which served as a receipt of the CD was given to my dad by a Wells Fargo banker. It was represented to my dad as a valid receipt showing the terms of the CD which included the interest rate, maturity date and the beneficiary name. If the Wells Fargo banker did not know it was invalid, how should the customer know it was invalid?
I'm currently waiting for a reply by either Wells Fargo or the OCC. I recently called the OCC to ask about the status of this case. According to the OCC, they are requesting more information from Wells Fargo.
If the OCC sides with Wells Fargo, I'm considering throwing in the towel. I don't like the thought of having to pay for Wells Fargo's mistake, but it's not a major financial blow. If you have any suggestions, please leave a comment.
I had hoped that the Wells Fargo branch manager would take responsibility to fix the mistake that one of his bankers made in using the wrong document for the CD. Instead he put the decision in the hands of legal bureaucrats somewhere in the Wells Fargo's corporate offices. I bet a community bank or credit union would have handled this better.
One lesson in this case is to double check the beneficiary listings on your bank accounts. Make sure it shows up in the bank's system. Don't assume the documentation that you received when you opened the CD is sufficient. For those using beneficiaries to extend your FDIC coverage, this is even more important. Make sure the account title shows the trust relationship. I have more details on this in my post Maximizing Your FDIC Coverage with Beneficiaries.
Another lesson is to bank at a credit union or community bank. My dad also had CDs at credit unions, and we didn't have any problems accessing those CDs.
Different Issue Than Extending FDIC Coverage with Beneficiaries
This issue reminded me of the problems that IndyMac CD holders had when IndyMac failed in July 2008. Several CD holders had depended on beneficiaries for additional FDIC coverage. However, IndyMac did not correctly specify the beneficiaries on some of the CDs (no trust relationship in the account title.) When the FDIC took over, those CD holders lost half of their uninsured deposits. In the eyes of the FDIC, it didn't matter if the bank was the one that made the mistake.
I consider my case to be different since it's Wells Fargo which made the decision that the document was invalid, and it was based on the document they generated and their internal policy.
Other Considerations for Beneficiaries Accessing CDs
Fortunately, all the other CDs that had me as the beneficiary did not have this issue. I was able to get access of those accounts without problems. However, many of those CDs were long-term CDs that were not close to maturity. Some of the rates on those CDs were over 5.00%. I'll have more on my decisions in dealing with those CDs in a future post.
My Problems with a Mega Bank Part 2 - Bank of America
My dad also had accounts at Bank of America. We didn't have any problems accessing the Bank of America accounts, but we did have another problem. It was similar to the Wells Fargo issue in that the branch manager was too quick to pass the problem to the corporate office. I'll have the full details of this problem in a future post.
Update 11/14/2011: I completed the post My Problems with a Mega Bank Part 2 - Bank of America.