Banking

Wells Fargo touts its progress in new report. But critics say ‘toxic’ culture persists

2017 was a tumultuous year for Wells Fargo

In 2016 Wells Fargo agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals. Soon after, the Observer and other media outlets report
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In 2016 Wells Fargo agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals. Soon after, the Observer and other media outlets report

Wells Fargo on Wednesday detailed steps it’s taking to turn itself around after a major scandal involving fake accounts erupted more than two years ago.

But critics were quick to call out the bank, saying problems persist, including fears of retaliation against employees who file complaints.

Wells, which is based in San Francisco but maintains its largest employment hub in Charlotte, said in its 103-page Business Standards Report that it has made fundamental changes to transform the company. It also apologized again to customers for the 2016 accounts scandal and other instances of customer harm it has disclosed since.

Many of the changes outlined Wednesday have been reported by Wells previously, such as the elimination of product sales goals for retail bankers in branches and call centers.

“We are confident that the changes we have made — and continue to make — along with the controls and safeguards we’ve put into place, have addressed the root causes of our sales practices and other issues and will prevent them from happening again,” the report said. The report also said the bank continues to investigate previously disclosed harm to customers and did not rule out Wells uncovering more problems.

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Minutes after the report was released, the Committee for Better Banks questioned Wells’ claims and accused it of continuing to have a “toxic environment and culture of fear, a lack of accountability among executives, and persistent low pay.

“In particular, frontline bank workers still fear retaliation if they speak out publicly about Wells Fargo’s continued abuses and deception,” the New York-based group said in a news release. The group is a coalition of industry employees who push for better working conditions at banks.

Wells Fargo spokesman Mark Folk directed the Observer to changes the bank said in the report that it’s made to the company’s ethics line.

Those changes followed an outside review of the line in late 2016, the report said. They include the creation of a process for third-party legal review of certain retaliation claims and the formation of an Employee Relations Solutions team to focus on issues raised through the line, the report said. In addition, the bank said it enhanced its non-retaliation policy in 2017.

“We ensure that each report of unethical or illegal activity and any claim of retaliation is thoroughly and objectively investigated, while taking measures to protect confidentiality,” Folk said. He added that Wells Fargo sought feedback on the report from its employees, including some who are members of the Committee for Better Banks.

It marks the first time that Wells Fargo has issued a business standards report. Among the items in the report, the bank said it:

Significantly decreased its credit exposure to private prison companies and expects the exposure to continue to decline. The bank also is not actively marketing to that industry;

Is developing new processes for managing customer complaints to improve, among other things, the consistency in how they are handled; and

Continues to contact customers who were affected by a Wells Fargo mortgage modification error it disclosed in August. That error contributed to hundreds of people losing their homes to foreclosure.

The report comes after a group of investors pushed Wells Fargo to explain how it failed to prevent its recent scandals.

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“I think a new day has dawned for Wells Fargo and they have taken some responsibility for what has happened within the bank,” said Sister Nora Nash, of the Sisters of St. Francis of Philadelphia. Nash helped lead talks with Wells Fargo for the report.

“They’ve approached it clearly and have looked back pretty carefully,” she said.

Deon Roberts has covered Charlotte’s financial services industry for The Charlotte Observer since 2013. His beat includes Bank of America and Wells Fargo. He attended Loyola University in New Orleans and is a native of Lafitte, La.
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