The case

The bank maintained one account relationship in the name of a trustee and one in the name of a company, both of which belonged to the same trust structure. The settlor of the trust was a US person. The beneficiaries were his undisclosed descendants. The trustee refused to disclose the names of the beneficiaries and to allow the bank to disclose client and account information to the IRS. The bank then hired an American law firm to clarify the legal situation with regard to tax issues and charged the costs to the company’s account. The clients’ lawyer requested that the bank reimburse this amount, which the bank refused to do. The clients’ lawyer then submitted the case to the Ombudsman. No solution could be found in the ombudsman proceedings. For more see link.

Source: Swiss Ombudsman Annual Report 2020 (German and French)  -> Bibliothek -> Jahresberichte (2020/31) page 64 (German) and Trust.ch/case Law “The Swiss Banking Ombudsman 2020/31 p.64 (pdf)” (French)

The commentary

In the conciliation proceedings, the Ombudsman referred to a decision of the Zurich Commercial Court which had prohibited a bank from charging a client for costs incurred by the bank for legal clarifications in the USA. In the case at hand, however, the clients behaviour conduct was disloyal in the bank’s view, because they had concealed the US domicile of the settlor and had submitted false confirmations on the relevant forms. The bank was of the opinion that it was entitled to make the disputed debits on the basis of the law of its general terms and conditions. The ombudsman had to stop his mediation efforts, even though he was not convinced by the bank’s attitude. He informed the (trust) client’s lawyer accordingly in a final decision.

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