Wells Fargo CEO to Face Senators Over Consumer Lending, Auto Insurance Sales Scandals

By and | October 3, 2017

Wells Fargo & Co. CEO Tim Sloan will be questioned about sales practices, mischarging customers for auto insurance, and complaints about mortgage fees at the bank’s consumer lending unit when he testifies before U.S. senators on Tuesday.

The U.S.’s third-largest bank has yet to shake off a year-long sales practices scandal that has hammered its reputation, sparking management changes, lawsuits and government investigations.

Reuters reported on Monday that the Office of the Comptroller of the Currency, the leading regulator for Wells Fargo, was considering new sanctions against the bank for customer abuses involving auto insurance and mortgage loans.

Wells Fargo reached a $190 million settlement with regulators a year ago after it said it had opened as many as 2.1 million accounts without customers’ authorization to meet internal sales target.

That estimate was raised to potentially as many as 3.5 million in August after an expanded review.

Sloan, appearing before the Senate for the first time as chief executive, is keen to reassure lawmakers that the San Francisco-based bank has moved on from the scandal and will highlight changes he has made including overhauling the structure and senior management of its retail bank.

But with the emergence of more recent problems in other products, including auto insurance and mortgages, he faces a tough task.

The stakes are high for Sloan, a 30 year company veteran. His predecessor, John Stumpf, resigned less then a month after he earlier appeared before the same committee to answer questions about the bank’s sales practices.

“We came to Congress without a good plan and all of you were right to criticize us,” Sloan said in prepared remarks ahead of the hearing.

Massachusetts Senator Elizabeth Warren, who last year accused Stumpf of “gutless leadership,” has repeatedly called on the U.S. Federal Reserve to remove 12 members of Wells Fargo’s Board of Directors.

Among those is vice chair Elizabeth Duke, a former Federal Reserve Governor who is set to take over as chair of Wells Fargo’s board at the start of the year.

Last week, Maxine Waters, the top Democrat on the House Financial Services Committee, released a staff report questioning whether Wells Fargo should be allowed to keep its federal bank charter.

The problems around auto-insurance and mortgage products emerged publicly this year.

In late July, Wells Fargo said hundreds of thousands of customers were due a refund on auto insurance that they did not need.

In late August, a homeowner sued Wells Fargo for charging too much for his fixed-rate mortgage. Wells Fargo has already said its ‘rate lock’ service is under investigation by the Consumer Financial Protection Bureau.

(Additional reporting by Ross Kerber in Boston; Editing by Carmel Crimmins)

Latest Comments

  • October 3, 2017 at 2:03 pm
    reality bites says:
    Wells Fargo = wealth forego.
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