More than seven years after fining Wells Fargo $100 million
for illegal sales practices, the Office of the Comptroller of the Currency
(OCC) terminated the consent order it issued against the bank in September 2016.
More than 3 million unauthorized customer accounts were discovered by federal
investigators, including several uncovered
long after the initial order.
The Consumer Financial Protection Bureau (CFPB) ordered the
bank to pay $35 million and the Los Angeles City Attorney’s office fined the
bank another $50 million in related actions. At the time, then-L.A. City
Attorney Mike Feuer said the order represented a cultural “sea
change” among U.S. banks.
The OCC’s consent order required Wells Fargo to make
significant changes to its consumer sales tactics. Federal regulators found evidence
that pressure from senior management within the company drove many salespeople
to register customers for products and services without their permission or
knowledge, such as bank accounts and credit products, to meet unrealistic internal
product sales quotas.
“I have repeatedly said that implementing a risk and control
framework appropriate for a bank of our size and complexity is our top
priority, and closing consent orders is an important sign of our progress,”
Wells Fargo CEO Charlie Scharf said in a statement. “This is the sixth consent
order that our regulators have terminated since 2019.”
Scharf joined Wells Fargo in 2019, shortly after Tim Sloan stepped
down as the bank’s top executive. Sloan was brought in to oversee the bank’s
initial remediation efforts after longtime chairman and CEO John Stumpf. Stumpf
retired a month after the sales misconduct allegations came to light and was called to
answer questions before Congress a year later.
“Confirmation from the OCC that we have effectively
implemented what was required is a result of the hard work of so many of our
employees, and I’d like to thank everyone at Wells Fargo involved for their
dedication to transforming how we do business,” Scharf said. “We are a
stronger, better Wells Fargo for our customers and communities, and we will not
lose sight of the remaining work to do. Our risk and control work remains our
top priority.”
A slew
of regulatory
scrutiny,
changes
in leadership
and record-breaking fines came in the years to follow, including a $1 billion
fine from the CFPB in 2018 over UDAAP violations, a $3
billion settlement in 2020 to avoid criminal charges related to the bank’s
sales misconduct and a $3.7
billion fine for misconduct relating to consumer abuses tied to mortgages,
auto loans and overdraft fees.
Eight consent orders remain active against the bank, including
one issued by the Federal Reserve in 2018, capping the
bank’s total asset size at $1.95 trillion and ordering changes to its board
of directors. The cap could remain in place until 2025.