Magazine article American Banker

Shawmut Drops 40% Trust Fees after Judge, Lawyers Complain

Magazine article American Banker

Shawmut Drops 40% Trust Fees after Judge, Lawyers Complain

Article excerpt

In response to repeated complaints by a Connecticut lawyer's association, ShamutBank said Wednesday it will stop charging fees to trust accounts in which the interest goes to indigent legal clients.

The Connecticut Bar Foundation, which administers the Interest on Lawyers' Trust Accounts (IOLTA), recently slammed Shawmut for overcharging.

The bar foundation complained that Shawmut cleared 40% in service charges from the interest built up on these trust funds. Other banks, according to a study by the group, charge little or nothing at all. Shawmut's largest competitor, Fleet Financial Group Inc., waives the fee, said bar foundation board president Superior Court Judge Raymond R. Norko.

By charging 40%, Shawmut takes $300,000 a year from more than 1,000 accounts. These accounts generate nearly $65,000 per month in interest that goes to legal aid for the poor, according to a bar foundation study. Judge Norko said Shawmut's charges, while not illegal, were "excessive."

Shawmut abruptly changed its policy late Wednesday after being questioned about it by the American Banker.

"We have reviewed the issue and decided to waive all service fees charged IOLTA accounts," said Robert Guenther, a spokesman for Shawmut. …

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