We maintain an account for a title company that they use for their escrows. The account is in the title company name and their customers (who the escrows are ultimately for) are not listed as owners or signers in any way. From our POV this is simply the title company's account.

Now the title company is saying that we are not allowed to charge them any fees (such as wire fees) due to some regulation they have because this money that sits there is not their money. The money that goes to this account is the customers money so we cannot charge them.

I am waiting for the title company to cite any specific regulation or law they are referring to. Admittedly, I don't have full knowledge of state laws in every area (Texas) but this seems...wrong? I could see something where the title company couldn't charge fees (or at least have to have disclosed them) but any kind of hypothetical rule seems unlikely to "pass-through" to us in this scenario.

Is there a prohibition on fees I am missing? How do other banks handle these types of accounts?

charge the fee to another account? Have them open a small account to take the fees from.