Wells Fargo Will End Sales Goals After Settlement Over Alleged Fake Accounts

SAN FRANCISCO, CA — 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 Jan. 1, 2017.

“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. “We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”

In reaching the settlement, Wells Fargo was ordered to pay $185 million in penalties. The Consumer Financial Protection Bureau said the move to allegedly secretly open unauthorized accounts was driven by the motivation to hit sales targets and receive bonuses. The $100 million penalty that will be collected by the CFPB is the largest of its kind imposed by the agency.

As a result of the alleged illegal practices, the bank has terminated 5,300 employees who worked in the community banking division. Some of the practices in which the bank engaged, as alleged by the CFPB, include: opening deposit accounts and transferring funds, as well as applying for credit cards and issuing and activating debit cards, all without consent. The CFPB alleged that such practices resulted in insufficient fund fees and annual fees, as well as associated finance or interest charges and other late fees for some consumers.

Wells Fargo was also ordered to pay $35 million to the Office of the Comptroller of the Currency and another $50 million to the City and County of Los Angeles.

Regulators said Wells Fargo opened as many as 2 million fraudulent accounts.

Wells Fargo has said it refunded customers $2.6 million with an average refund of $25. The bank noted that the refunds represent a fraction of 1 percent of the accounts reviewed. According to the settlement, Wells Fargo said it has hired an independent third party to identify potentially unauthorized accounts opened between May 2011 and July 2015 and has started refunding customers.

The Senate Banking Committee expects to hold a hearing on Wells Fargo and intends on calling Stumpf as a witness, the Wall Street Journal reported. The committee plans to hold the hearing Sept. 20.

Image Credit: Mike Mozart via Flickr Creative Commons