Wells Fargo CEO Tim Sloan spoke on behalf of the company’s entire leadership team recently when he apologized to 1,200 employees in Charlotte, N.C., and thousands more watching across the country via webcast for the company’s sales practices. “I want to apologize to all of you. I want to say we’re sorry for the pain you have experienced as team members as a result of our company’s failures,” Sloan said. “Our senior leadership is committed – and I am personally committed – to taking the decisive actions and to learning the necessary lessons to ensure our company and our customers are never susceptible to the kinds of behaviors and failures that got us to where we are today.”
Sloan said he and the company’s senior leadership are committed to the primary objective of restoring trust in Wells Fargo and pride among employees, in the company and its mission – to satisfy customers’ financial needs and help them succeed financially – vowing “we won’t rest until we are successful.”
He said he does not want media sources to think the company is in denial about the things that went wrong, problems that need fixing and customers and employees who were harmed. While he said he accepts these things, Sloan said he wants everyone, from shareholders to employees to the public, to know that the company’s portrayal in the media is not representative of its core values and the values of its employees.
The official Wells Fargo values Sloan referenced are as follows: people as a competitive advantage, ethics, what’s right for customers, diversity and inclusion, and leadership.
“Our failures are not the result of our values,” he said. “I suspect they are the result of some of us forgetting to be guided by them. But for the vast majority of us, it has been these values that have shaped us into great leaders and teammates, and advisors and servants to our customers. Let’s never forget this.”
Sloan said he also believes problems stemmed from forgetting the company’s six priorities: putting customers first, growing revenue, managing expenses, living the company’s vision and values, connecting with communities and stakeholders, and managing risk.
“We need to recognize the following: There are things that need to be fixed within our culture. There are weaknesses within it that we must change; there are ways in which we behaved and did business that did not serve our customers, or our team members, or our investors or the many institutions and communities that rely on us to get things right,” Sloan said. “That is not an easy thing to say, especially for a company with a long history of success as ours. But if my top priority as CEO is to restore the trust we’ve lost, then I also need to make it safe to talk about the problems that got us here – no matter where they began, no matter where their responsibility lies.”
Sloan gave credit to the “vast majority” of Wells Fargo employees who he said have always acted in the best interests of customers and the company every day, specifically mentioning tellers, platform and phone bankers and branch managers. The task of restoring trust and learning from past mistakes to become a better community bank is one shared by the entire company, Sloan said, and one that will take time to achieve.
“First off, I think we can agree the trust we’ve lost has affected all of us, so the effort to restore it needs to involve all of us, too,” he said. “Wells Fargo’s great reputation has been an enormous asset for all of us and it will take all of us to restore it. This means being champions and stewards for the company, our brand and our reputation. We also can’t be complacent, anywhere inside our company, whether your team serves customers directly or supports teams that do.”
The efficiency with which Wells Fargo employees are able to “come together, as one team and one company” will determine the timeliness of its recovery of lost trust on the road to becoming “the better and stronger company we must become,” Sloan said. To this end, he said employees can begin helping immediately by keeping customers’ best interests at heart while striving to meet all their needs, addressing their concerns and provide great service and advice, overall.
He said employees should engage with their managers and, most importantly, stakeholders while utilizing content made available to them by the company to ensure they understand “our reality and how we’re moving forward. When you do, you’re becoming part of the process of restoring trust in Wells Fargo by putting yourself in a position to be a knowledgeable and credible advocate for the company,” he said
Such a display of caring and commitment is invaluable to regaining public trust, according to Sloan, who warned that “there are no quick fixes” and employees should still expect “more tough headlines, as additional accountability actions occur, and other investigations and reviews are completed.”
While such occurrences promise to bring with them more pain for employees, Sloan said, “we can’t let any of that paralyze us. We must act decisively to move forward.”
Sloan discussed the specific issues surrounding the problems with sales practices in five key points:
- First, product sales goals sometimes resulted in behaviors and practices that did not serve the best interests of customers or employees, and the company was slow to recognize the adverse effects;
- Second, despite ongoing efforts to combat unacceptable practices and bad behaviors, they persisted either because the company minimized these issues or failed to recognize them as bigger than originally thought;
- Third, the company failed to acknowledge the role leadership played in creating and enabling bad practices, then blamed employees, something Sloan said “still hurts” and that he is committed to rectifying;
- Fourth, the failure to heed warning signs sooner; and
- Fifth, failure to invite inspection more frequently and welcome credible operational challenges.
“My pledge to you is that we will keep these lessons, and others we discover, part of our ongoing conversation, so we may learn from our mistakes,” Sloan said. “In the meantime, we won’t wait for all the answers before we take action. We need to trust ourselves and what’s good about our company. This has already involved a wide array of actions to address sales practices issues. Expect more to come.”
Sloan highlighted several steps Wells Fargo is taking in an effort to improve as a company. These include: changing leadership of the retail bank; changing risk management processes at the retail bank, consistent with the reorganization of enterprise functions across the company to create a stronger risk and control foundation, thus allowing senior employees throughout the bank to provide more independent, credible challenges to operations; renewal of commitment internally and to customers’ overall experience through elimination of product sales goals; a new performance plan for retail bankers based on customer service, growth and risk management will be implemented with the goal to let nothing interfere with the action of doing right by customers; system and process enhancements such as automated confirmation emails and acknowledgements sent to costumers applying for credit cards and improved multi-factor authentication processes designed to protect customers’ information; a $50 million commitment, this year alone, to enhanced quality assurance monitoring;
An expanded independent third-party mystery shopper program with risk professionals providing greater oversight and expanding the customer complaint servicing and resolution process; contacting affected retail and small business customers with checking, savings and/or credit card accounts or an unsecured line of credit with Wells Fargo to ensure their concerns have been addressed; a toll-free number dedicated to helping customers with concerns about sales practices; determining whether secondary harm occurred for customers, such as a FICO score affected by an unwanted credit card; reviewing EthicsLine processes in light of claims of retaliation against employees;
a special human resources team to assist former employees that left retail banking for performance reasons and are eligible for rehire; surveying employees to understand their views on the company’s approach to ethics and integrity; engaging an independent consultant, to be approved by Wells Fargo regulators, who will review sales practices and customer harm in the community bank while engaging a separate independent consultant to review sales practices across the company with the goal of going beyond the requirements of consent orders; and engaging outside independent culture experts to help point out cultural weaknesses within the company in need of strengthening or fixing.
“We know we don’t have all the answers and want to have the courage to learn from others,” Sloan said.
He closed by reminding everyone listening to his speech that the road to recovering trust could take weeks, months or years, and that patience, strength and increasing transparency will be vital as the company strives to demonstrate perseverance. He pointed out an investor presentation of third-quarter earnings given Oct. 14 by Wells Fargo CFO John Shrewsberry as the kind of transparency that could be expected at his first CEO Town Hall on Nov. 10.
“It’s hard work and we know it, but the mission remains worthwhile because of the pride and satisfaction it gives us, and because of the opportunity it offers us to deliver value to customers, investors and communities,” Sloan said. “This is our legacy and our future, and it’s worth fighting for.”