US bank pushed accounts on millions of customers
Wells Fargo has long been the envy of the banking industry for its ability to sell multiple products to the same customer, but regulators yesterday said those practices went too far in some instances.
The largest US bank by market capitalisation will pay $185m (€165m) in penalties and $5m to customers that regulators say were pushed into fee-generating accounts they never requested.
"We regret and take responsibility for any instances where customers may have received a product that they did not request," the bank said of a settlement reached yesterday with California prosecutors and federal regulators.
The Consumer Financial Protection Bureau (CFPB) will receive $100m of the total penalties - the largest fine ever levied by the federal agency.
"Today's action should serve notice to the entire industry that financial incentive programmes, if not monitored carefully, carry serious risks that can have serious legal consequences," said CFPB director Richard Cordray.
Los Angeles officials and the Office of the Comptroller of the Currency were also party to the settlement.
In a complaint filed in May 2015, California prosecutors alleged that Wells Fargo pushed customers into costly financial products that they did not need or even request.
Bank employees were told that the average customer tapped six financial tools but that they should push households to use eight products, according to the complaint.
The bank opened more than two million deposit and credit card accounts that may not have been authorised, the CFPB said yesterday.
Wells Fargo spokeswoman Mary Eshet said the bank fired 5,300 employees over "inappropriate sales conduct". The firings took place over a five-year period, Eshet said, adding that the bank has 100,000 employees in its branches.
Wells Fargo regularly releases numbers about how many products it sells to customers, a practice it calls "cross-sell".
Its wealth and investment management unit, for example, sold 10.55 products per retail banking household in November 2015, up from 10.49 a year earlier, according to the bank's annual 10-K financial filing.
In the second quarter, however, the bank changed how it tallies up some of those numbers and said it was considering more changes.