Question & Answer

Question: A Pennsylvania banker asks: "We have had several inquiries lately from attorneys who want to know if we have an account with a certain individual, and if the account is in good standing.

"Do we have to (or should we) respond to these inquiries?

"Does it make a difference if the inquiry comes over the phone or through the mail?

"Does Financial Privacy have anything to do with this?"

Answer: Financial Privacy has nothing to do with inquiries from individuals to a financial institution. Financial Privacy applies to federal agencies only.

Requests for information on accounts often come to financial institutions from agencies or lenders to whom your customer has applied, and has given permission to the agency or lender to ask for information from you regarding his/her accounts. These requests occasionally come to you over the telephone from another financial institution, though most often government or state agencies or lenders will make their request for information through the mail or over the wires.

You normally respond to these inquiries, having been given the authority to do so by your customer, who has signed a form giving the inquiring institution or agency permission to ask.

The case is different on a "cold call" from someone seeking information about one of your customers. There is an implied or expressed contract of confidentiality between a customer and the institution. If the existence and/or status of an account is revealed without justifiable reason, and this information ultimately damages the customer's reputation or credit, the institution could be open to a lawsuit.

Therefore, the prudent banker is hesitant to give any information to an inquirer regarding the existence or status of accounts.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 1, 1/91