2017 was a tumultuous year for Wells Fargo
An expanded review of Wells Fargo’s sales practices has found as many as 3.5 million potentially unauthorized consumer and small business accounts over a nearly eight-year period – a much bigger number than previously disclosed.
The analysis released Thursday is the latest effort by the San Francisco-based bank to make things right with customers after it acknowledged last year that some of its employees had created fake customer accounts in an effort to meet aggressive sales goals.
Wells’ initial review identified around 2.1 million potentially unauthorized accounts from May 2011 to mid-2015. But the bank had said in early August that it expected a more extensive third-party review – covering January 2009 to September 2016 – to show a “significant increase.”
The bank, which has a major Charlotte employment hub, said Thursday it will provide customers an additional $2.8 million in refunds and credits to cover fees and other charges incurred from the accounts, adding to $3.3 million refunded as part of the original review.
In addition, the new analysis found 528,000 potentially unauthorized online bill pay enrollments during the eight-year period. The bank will refund an additional $910,000 to customers who incurred fees or charges from these enrollments.
“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” Wells Fargo CEO Tim Sloan said on a conference call with reporters. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”
Although a class-action lawsuit settlement the bank has reached applies to accounts as far back as 2002, Sloan said the bank has no plans to extend the review to earlier years. He noted the third-party analysis erred on the side of the consumer, so some of the identified accounts might not actually have been unauthorized.
The analysis did not lead to any additional employee or executive firings, Sloan said. The bank did not provide a state-by-state breakdown of the numbers.
Last fall, San Francisco-based Wells reached a $185 million settlement with regulators over the allegations, but the scandal continues to dog the nation’s No. 3 bank by deposits. The fallout has cost former CEO John Stumpf his job, led to changes on the board and spurred congressional hearings, lawsuits and other investigations.
Asked by a reporter if a Wells Fargo veteran like himself should continue running the bank, Sloan said that was a question better addressed to the bank’s directors.
“I serve at the pleasure of the board,” Sloan said. “Do I think that I should be CEO? I hope so. We’re making a lot of progress here.”
He said he appreciated that some may question whether the board has taken significant action, but he pointed to the members’ independent investigation of the matter, executive firings and recently announced director changes.
In addition to the new refunds disclosed Thursday, the bank is set to pay out $142 million in the class-action settlement, and it has doled out another $3.7 million through a complaints process.
Meanwhile, the bank continues to face an investigation from federal prosecutors in Charlotte and San Francisco over its sales practices, Jill Westmoreland Rose, the U.S. Attorney in Charlotte, told the Observer Wednesday.
Wells also faces scrutiny of its auto lending business after the bank 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 have also contributed to vehicle repossessions.
Jaret Seiberg, an analyst with Cowen and Co., wrote in a research report Thursday that the new disclosure is likely to keep Wells Fargo in the spotlight of regulators as well as boost the likelihood of congressional hearings. Democrats in the House and Senate, including Sen. Elizabeth Warren of Massachusetts, have urged new hearings into Wells. Thursday’s revelations are also expected to continue to limit the ability of Wells Fargo to aggressively grow, Seiberg wrote.
“We continue to be disappointed with how Wells Fargo has handled its fake account controversy,” Seiberg wrote. “Every new disclosure seems to expand the scope of the bank’s troubles, which creates the perception that the scandal is getting bigger rather than going away.”