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.
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In the wake of a settlement reached with regulators over the opening of accounts without the consent of customers, Wells Fargo announced on Tuesday that it would end all product sales goals in retail banking beginning January 1, 2017.
It is also less than the more than $200 million that the stock in the company held by company’s chief executive, John G. Stumpf is worth.
Tolstedt led the Wells Fargo division that created the false accounts in question and in the past her pay was linked to “cross selling”. Banks lend and borrow money, and accept customers’ deposits and pay interest in return.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services, regulators said. She announced earlier this year that she would retire from Wells at the end of 2016.
Wells Fargo and JPMorgan are among the top 20 largest firms by market capitalisation globally.
Wells Fargo hired a consulting firm within the past year to review the bank’s data on all deposit and credit-card accounts opened since 2011, Chief Financial Officer John Shrewsberry said this week at an investor conference in NY.
The phantom accounts meant that some customers were charged for insufficient funds, according to the regulators.
Carrie Tolstedt, the head of the bank’s retail operations where the abuses are alleged to have occurred, stepped down in July. This strategy is common in banking industry, but Wells Fargo is considered particularly aggressive.
In an interview with The Wall Street Journal, Stumpf said there was no problem with the culture at the bank, and that the blame should be placed on individual employees.
Wells Fargo has said it refunded customers $2.6 million with an average refund of $25.
Wells Fargo declined to comment. It is as it sounds: increasing the number of products sold to customers, from savings and checking accounts to mortgages, debit cards and so on.
The case has thrust the San Francisco-based bank into a harsh spotlight at a time when big US banks are still attempting to fix their reputations following the 2008 financial crisis.
“This was a staggering fraud”, Warren told CNN last week, adding that she’s skeptical Wells Fargo management was unaware of illegal activity of this scale.
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Politicians are calling for an investigation, and Wells Fargo and regulators are expected to testify in the Senate next week.
