When the Bank Refuses Your General Power of Attorney
As explained in a recent New York Times article (“Finding Out Your Power of Attorney is Powerless,” New York Times, May 6, 2016), some banks refuse to accept valid general powers of attorney without cajoling from attorneys. Instead, the bank or financial institution will insist that that the customer, who is often past the point of being capable of executing a new power of attorney, execute the bank’s own form power of attorney.
These bank-specific forms often contain unfavorable arbitration and/or indemnification provisions. Arbitration could leave you with no remedy in court, and indemnification could mean you have to pay the bank’s attorneys’ fees if the bank gets sued later on.
This bank tactic is, in most cases, simple bullying: they know you don’t feel like you have a choice. The bank also knows that most people won’t hire an attorney to insist upon the bank recognizing the legally sufficient general power of attorney, in part because there is no fee shifting provision. That means there’s nothing to make the bank pay for your attorneys’ fees when the bank refuses a valid and legal power of attorney but you ultimately prevail on making them accept it.
Forcing the bank's hand is worth it, especially because these sorts of bank policies often lead to the very abuses of the system they were designed to protect: caregivers and others having their incapacitated clients sign bank-form powers of attorney that waive all of the clients’ rights. Couple that exploitation (which may or may not be well-intended) with the waiver of all of the client's recourse against the bank, and it's a recipe for disaster.
From my own experience, these situations usually require a simple escalation beyond the bank manager. Most banks that I have encountered with this sort of "only our form" practice also have an internal power of attorney department. Once the power gets faxed over, it typically only takes a day or two before the bank acknowledges and recognizes the power. In a few other cases, the matter was quickly resolved with a newly-executed certification by the agent.