Wells Fargo said in a regulatory filing Friday that an expanded review of sales practices at the bank is expected to identify a “significant increase” in the number of potentially unauthorized accounts that employees created over an eight-year period.
The development is the latest sign the No. 3 U.S. bank by assets is still struggling to recover from its sales scandal, even as it deals with new scrutiny over auto lending practices.
Last fall, San-Francisco-based Wells reached a $185 million settlement with regulators over allegations that employees working to meet aggressive sales goals opened more than 2 million deposit and credit card accounts that may not have been authorized by consumers.
The bank’s initial review covered May 2011 to mid-2015, but now stretches from 2009 to September 2016. The bank said it does not expect any new customer reimbursement costs to have a significant financial impact on the company. The expanded review, which had been previously announced, is expected to be completed by the end of September.
Wells Fargo shares fell about 1 percent Friday to $52.83, sliding after the regulatory filing became public. Shares of other big banks were up Friday.
The bank, which has a major Charlotte employment hub, has been working to rebuild trust after the scandal erupted last September. But Friday’s filing shows Wells still wrestling with the sales scandal as well as new problems.
In a scandal that emerged last week, Wells admitted as many as 570,000 customers may have been charged premiums for auto insurance they did not need, a practice that in some cases may also have contributed to vehicle repossessions. Wells has since apologized to customers and said it will provide approximately $80 million in remediation.
In the filing Friday, Wells said the auto lending matter may subject the company to investigations from federal, state or local government agencies. Already some members of Congress this week have called for hearings in Washington.
Since the phony accounts scandal emerged, Wells’ board has also faced questions about its oversight of the bank.
The board released a report this spring that laid blame largely on two former executives, including former CEO John Stumpf. But some critics, including U.S. Sen. Elizabeth Warren, D-Mass., have pushed for a major board shake-up.
The filing Friday said directors recognize more work needs to be done and that the board is engaging in a “comprehensive review of its structure, composition and practices.” The review is expected to result in actions to be announced in the third quarter, the filing says.
“To regain the trust we have lost, we must continue to be transparent with all our stakeholders and go beyond what has been asked of us by our regulators by reviewing all of our operations – leaving no stone unturned – so we can be confident we have done all that we can do to build a better, stronger Wells Fargo,” CEO Tim Sloan said in a note to employees after the filing.
Among other issues outlined in the filing:
▪ The bank settled a longstanding lawsuit over claims that some Veterans Administration mortgage refinance loans the bank originated should not have been eligible for guarantees paid to the bank by the VA. The bank is paying $108 million, but denies the allegations.
▪ The Consumer Financial Protection Bureau is investigating whether customers were harmed by Wells’ steps to freeze and close consumer deposit accounts after the company detected suspected fraudulent activity by third parties or account holders.