The focus on Wells Fargo’s sales culture just won’t go away.
Two U.S. regulators are probing the bank over whether it has pushed employees too hard to meet sales quotas and not done enough to prevent questionable behavior, The Wall Street Journal reported Monday, citing people familiar with the matter.
The reports of probes by the Office of the Comptroller of the Currency and San Francisco Federal Reserve follow a lawsuit filed earlier this year by the city of Los Angeles against the San Francisco bank. The suit accused Wells of imposing “unrealistic” quotas that drove its bankers to commit fraudulent acts, including opening customer accounts without their authorization.
Wells Fargo spokeswoman Mary Eshet said Monday the lender doesn’t comment on regulatory matters. The OCC and the San Francisco Fed declined to comment.
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In an interview with the Observer earlier this month, Wells Fargo CEO John Stumpf said he disagreed with the accusations in the Los Angeles suit. Wells Fargo puts its customers ahead of sales goals, he said.
“A team member should never, ever feel that they have to provide a product or service that a customer does not want or does not need because of a goal that Wells Fargo has,” Stumpf said.
Stumpf said he uses the company’s quarterly town-hall meetings to express such views to employees.
“I’m proud of our culture,” he said. “When you have 265,000 people, not everything will be perfect every minute of every day. We’re humans and we try to make it better.”
The scrutiny over Wells Fargo’s sales culture comes as the bank continues to grow, and tout, its cross-selling – a term for getting multiple products into the hands of customers. For instance, if you have a mortgage with Wells Fargo, the bank might offer you a credit card deal. As of the end of September, Wells Fargo reported having 6.13 products per household.
The figure has climbed over the years, helping Wells Fargo become a more attractive bank for investors. Earlier this year, Wells Fargo surpassed Industrial & Commercial Bank of China Ltd. to become the most valuable bank in the world by market capitalization – the combined dollar value of all its outstanding shares.
In its lawsuit, Los Angeles said Wells Fargo “boasts” about its cross-selling prowess. The bank, which has pushed to have eight products per household, has a “strictly enforced sales quota system” that is difficult for many bankers to meet without resorting to abusive and fraudulent tactics, according to the suit.
Stumpf, for his part, said he instructs Wells Fargo employees to think of themselves as “financial doctors.”
“We understand a need, discover an opportunity and offer a product and service that will help that customer,” he said.