Wells Fargo is cutting its aggressive product sales goals for retail bankers, the bank announced Tuesday after state and federal regulators fined it $185 million last week for allegedly opening millions of unauthorized accounts to meet those targets. He said that some employees won’t “honor” the bank’s culture and that the bank had changed its sales goals to put in more discipline and to take “more risk off the table”. Some 5,300 employees were fired between May 2011 and July 2015 for the practice.
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In its settlement with the CFPB – in which it didn’t admit or deny any wrongdoing – the bank revealed that 5,300 employees have been fired, and that customers paid more than $2.6 million in bogus fees.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction”, CEO John Stumpf said in a press release.
It was this kind of internal analysis that led to Wells Fargo’s internal goal of selling at least eight financial products per customer.
The industry watchdog, the Consumer Finance Protection Bureau (CFPB), said in a blog post that it will collect $100 million from Wells Fargo as a settlement, while another $85 million will go to the Comptroller of the Currency and the Los Angeles City Attorney. The bank spent $50 million on monitoring, including a mystery-shopper program that conducts more than 15,000 visits a year.
“It was all management: their boss, then their boss, then their boss”, Mita Bhowmick, a former Wells Fargo teller, tells the Journal in regard to the sales tactics.
Wells Fargo said it has dismissed 5,300 workers, including some managers, during the past five years for such illegal practices.
Under her supervision, many employees were creating fake accounts for current customers and even forging their signatures. For example, an hour after opening a new deposit account at Wells Fargo, our customers are now sent a welcome email including a summary of what bank accounts were opened and telling them how to get the most value from their accounts.
“This ought to be a moment where people stop and remember how risky the system is when you don’t have the proper protections in place”, Treasury Secretary Jack Lew said at a conference Tuesday, according to CNBC.
In an interview with CNBC Tuesday, US Treasury Secretary Jack Lew said the fines highlighted “bad behavior”, but “how that flows through in terms of next consequences is going to depend on the facts of the case”.
Members of Wells Fargo’s government relations staff met with Shelby’s Banking Committee staff last week as the CFPB announced the fine, according to the senator’s office. Tolstedt, 56, also holds about $53 million of shares amassed during her 27-year career. They all worked in Tolstedt’s community banking division, the company said.
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When we asked about a potential “claw back” of millions in compensation for Tolstedt, Folk said Wells Fargo isn’t talking about that today. “Fortune magazine has now dubbed Tolstedt, who exits with $125 million in the usual stock option/restricted share haul, the company’s “‘sandbagger’-in-chief”.
