Q&A: Here’s a question that a Wisconsin credit union recently asked The League’s Legal Affairs team, along with our answer. Do you have a compliance question? Contact The League’s Compliance Hotline at (800) 242-0833 or email.
Q. We have a member who does not want to renew her safe deposit box because she has left the area. The member would like to mail her key to us – she states that the box is empty. We are seeking advice on how to proceed.
A. Safe Deposit Boxes (SDBs) are an unlimited risk area. You do not know what is in an SDB once you rent it out to a member. You do not know the value of the contents. The box could be empty, as your member indicates here. Or it could contain an envelope from Aunt Agatha that your member forgot about, holding $250,000 in bearer bonds. You need to have tight SDB procedures that you always follow. Please treat every situation as if the box contains $5 million, no matter what the perceived risk.
Hopefully, the credit union has purchased a comprehensive SDB manual. It is essential to operating a safe deposit box program safely. A sound SDB program uses a manual developed by seasoned SDB professionals who are familiar with the many lawsuits against institutions regarding claims of unauthorized access to the box, missing property, etc. They devise tight procedures for every step of SDB operations to reduce the risk of successful claims against the institution. Loose procedures invite claims and cause losses. The SDB manuals include forms and checklists to help you deal with various situations.
Such manuals will typically address the situation of box being surrendered by mail, have a form for the co-lessees to sign, and procedures to follow, depending on whether the box is empty, and whether the keys are returned.
- If the credit union does not have a comprehensive procedures manual, it is important to get one. The League does not offer an SDB manual. ii Release No. 0146 provides important information but does not address the details of operations. CUNA discontinued their SDB manual decades ago.
This is not an endorsement, but Safe Deposit Specialists offers a Policies and Procedures Handbook as well as various other products. Its founder and president has spoken at League seminars about SDB programs.
- The credit union should take care that none of its SDB policies and procedures contradict its SDB lease provisions. The credit union is bound by contract to follow the terms of the lease.
- Because of the liability risks with safe deposit boxes, the credit union should consider any optional SDB coverage that may be offered by its bond carrier. The bond carrier may have its own suggestions for safe practices, since they underwrite risk.
To get an idea of some of the issues that may be involved in a sound approach to accepting the surrender of an SDB by mail, we can review a couple of postings on the web. These are not a substitute for obtaining a SDB manual with more complete guidance.
- On BankersOnline.com we can see a Q&A relating to Closing a Safe Deposit Box by Mail. The institution posing the question mentions a few of the highlights from its own procedures manual for this situation and gets feedback from others with some expertise on SDBs. The post does not include the complete guidance and does not include the form for the lessee to sign off on.
- Bank of America has posted a copy of the form it uses for an SDB surrender, including by mail. Safe Deposit Box Account Closing Request.
The two resources just mentioned are not “ready to use” by the credit union, but they introduce the credit union to the types of issues and documentation to expect to have in a sound SDB program to deal with the surrender of a box by mail.
The bottom line: Invest in a good SDB procedures manual. There is too much risk with SDBs to rely on improvised procedures.