Wells Fargo has been accused of pushing financial products on customers which they did not ask for or was required by them.
Although Wells Fargo’s ability to sell multiple products to the same customer base is legendary, regulators have now faulted it for pushing its case too far.
According to regulators, the bank has pushed its products into fee-generating accounts on customers, who never requested them in the first place.
“We regret and take responsibility for any instances where customers may have received a product that they did not request,” said a statement from the bank after it reached a settlement with federal prosecutors and federal regulators.
The settlement will see the Consumer Financial Protection Bureau (CFPB) receiving $100 million of the total penalties, which incidentally is the largest fine ever levied by the agency.
“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” said Richard Cordray, CFPB’s Director.
In May 2015, based on a complaint. Prosecutors in California sued Wells Fargo for having pushed customers into expensive financial products, which they neither requested or need.
According to the complaint, bank employees were told that instead of tapping 6 financial tools for customers they should push households to 8 financial products.
The CFPB said yesterday that Well Fargo opened more than 2 million deposits and credit card accounts that may not even have been authorised by customers.
Mary Eshet, Wells Fargo’s spokeswoman has stated that the bank has fired 5,300 employees over this “inappropriate sales conduct” over a period of 5 years. The bank currently employs 100,000 employees in its branches.
According to information available in the bank’s annual 10-K financial filings, it regularly provides the number of products it sells to customers, a practice which it refers to as “cross-sell.”
During this year’s second quarter, the bank has changed the way it tallies up those numbers and has disclosed that more changes are in the offing.
Dispersing any fear of crackdown of cross-sells on the banking industry, Piper Jaffray, an analyst with Kevin Barker said that he does see this action as having wide repercussions in the entire banking industry.
“I think this is unique to Wells Fargo and their particular situation and how hard they push on cross-sell,” said Jaffray.