Wells Fargo to pay states $575mn over improper sales practices

Bloomberg

Wells Fargo & Co will pay $575 million to settle state-level claims over sales practices, marking the latest cost in the fallout from a series of scandals that erupted at the bank more than two years ago.
The settlement with 50 states and the District of Columbia announced resolves state investigations into Wells Fargo’s practices from 2002 to 2017. The practices, which have previously been disclosed, include opening bogus accounts, charging improper mortgage rate-lock extension fees and forcing insurance policies on auto-lending customers.
Wells Fargo’s expenses surged over the past two years, driven by fines and legal costs as investigations multiplied across business lines. Following the 2016 revelation that bank employees opened as many as 3.5 million accounts without customer approval in order to meet sales goals, issues have emerged in the bank’s consumer-lending, wholesale and wealth-management arms.
“Wells Fargo customers entrusted their bank with their livelihood, their dreams and their savings for the future,” California Attorney General Xavier Becerra said in a statement. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products — from bank accounts to insurance — that they never wanted.”
The settlement exemplifies the heightened importance states play in financial supervision amid deregulation under the current administration, according to Becerra’s office. Although the government stepped in during the previous administration, “we can’t trust our federal regulators to step up and act the next time there’s a crisis,” Sarah Lovenheim, a spokeswoman for Becerra, said in an emailed statement.
The bank said in a statement that it had already set aside $400 million for the settlement and would take a $175 million provision in its fourth-quarter results. California, the bank’s home state, will get the biggest payment in the settlement at about $150 million, according to a spokeswoman for Becerra. “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” CEO Tim Sloan said in the statement.