A federal regulator on Wednesday criticized its oversight of Wells Fargo’s sales practices, saying it failed to act quickly enough once it learned of problems at the San Francisco bank.
In a report, the Office of the Comptroller of the Currency said it knew of issues with sales practices at Wells since at least 2010 – six years before the scandal would erupt in September with $185 million in fines from OCC and other authorities. Despite information OCC possessed, including complaints from the bank’s own ethics line, the regulator failed to investigate “root causes,” the report said.
The OCC “missed opportunities to address concerns with unsafe or unsound sales practices in the (Wells Fargo) community banking division earlier,” says the internal report, “Lessons Learned Review of Supervision of Sales Practices at Wells Fargo.”
Wells Fargo declined to comment on the report.
Wednesday’s findings also show the OCC had identified Wells’ high-pressure sales goals as the source of the complaints as early as 2010.
Wells Fargo employees would earn bonuses if they “cross-sold” multiple products to customers, creating a high-pressure environment that led bankers to create accounts customers didn’t know about. Even though the OCC linked complaints to that bonus scheme, the regulator failed to take appropriate supervisory action, the report says.
The report also shows the OCC knew as early as January 2010 of 700 whistleblower complaints tied to sales practices. OCC examiners questioned then-head of community banking Carrie Tolstedt about the cases that same month, according to the report.
In response, Tolstedt attributed the high number of cases to Wells’ culture of encouraging valid complaints, the report says. The report faulted the OCC examiners for not investigating such issues further.
Wednesday’s findings follow results the bank’s board issued last week of its own investigation of the scandal. That report placed blame squarely on Tolstedt and former CEO John Stumpf, both of whom left the company last fall.
The OCC, which regulates national banks, said Wednesday it is in the process of “implementing actions” in response to its internal report “to continue enhancing its supervision.”
Earlier this month Reuters, citing people familiar with the matter, reported the OCC has removed its most senior bank examiner for Wells Fargo in the wake of the scandal.