Wells Fargo & Co. said Tuesday that it would eliminate all sales goals for credit cards, checking accounts and other retail banking products as the financial giant tries to fix its image following a $185 million settlement over aggressive sales tactics.
Advertisement
On Tuesday, Wells Fargo CEO John Stumpf released a statement promising that the bank would eliminate product sales goals for its employees after thousands of employees were found to have opened fake accounts using real customer names and identification in order to boost internal sales numbers.
During a five-year period, the bank fired roughly 5,300 employees and managers for opening the accounts without customers’ knowledge or approval as part of a bid to meet sales targets, Wells Fargo confirmed.
Wells Fargo will eliminate the sales goals by January 1, according to a statement. On Tuesday, Wells Fargo announced it would remove product sale requirements for its retail bank. While standing up to the C-suite takes resolve, he said that if employees complain about feeling pressure to engage in unlawful conduct or about others violating the law, “there are whistle-blower protection laws in place that provide strong protections for HR and compliance professionals who face retaliation for reporting these issues up the chain of command”.
Affected employees work in the bank’s call centers in the US and elsewhere, including some at Wells Fargo’s Customer Information Center on W.T. Harris Boulevard.
Last week, the San Francisco bank agreed to pay $185 million to settle investigations by Los Angeles City Atty.
On Friday, Wells Fargo sent an alert to some of its employees requesting that they temporarily suspend the practice of trying to sell customers other products – known as cross-selling – because of high call volumes. Robert Menendez of New Jersey, said Wells Fargo’s CEO, John G. Stumpf, should be called to testify. The bank didn’t admit or deny wrongdoing in its settlement.
“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences”, said Mr. Cordray. We see no reason criminal charges should not be considered next.
Shrewsberry said additional spending at the bank around selling practices includes “enhanced training, monitoring and controls”.
The phantom accounts meant that some customers were charged for insufficient funds, according to the regulators.
On top of the federal investigation, Wells Fargo is set to be grilled by Senator Elizabeth Warren and her colleagues on the Senate banking committee on September 20.
However, media organizations have reported that Carrie Tolstedt, the bank executive who oversaw the unit that created the unauthorized accounts, is retiring from Wells Fargo with a golden parachute package of benefits worth $124.6 million.
When we contacted Wells Fargo to ask about the situation Tuesday, senior vice president Mark Folk said Tolstedt is remaining with the company through December to help the transition process. It will also pay restitution to affected customers.
Advertisement
The consultant found that 1.5 million deposit accounts and 565,000 credit-card accounts may not have been authorized by customers, according to a presentation Shrewsberry gave at the conference.
