Wells Fargo is the world’s largest bank by market capitalization, with a value of approximately $254 billion. Moreover, according to the latest reports, its total assets rank it in the top 15 banks in the world. For many years the banking industry has had its eyes on Wells Fargo for their banking practices. According to several investigators, the bank had been selling multiple, unrequested products, to the same customers.
California prosecutors, together with federal regulators have reached a settlement with Wells Fargo in September 2016 regarding their practices. The settlement is set at $190 million. $185 million will be directed towards paying penalties, while the remaining $5 million will be directed towards the bank’s customers. A Wells Fargo spokesperson said that the bank will take full responsibility of all the cases in which customers had received a product which had not been requested.
According to the report, a large portion of the settlement will go towards the Consumer Financial Protection Bureau. The CFPB will receive $100 million of the $185 million. This will be the largest fine ever collected by a US federal agency. Richard Cordray, CFPB’s director, said that other banks should take notice in this action, as unmonitored financial incentive programs could lead to such consequences.
The initial complaint against Wells Fargo was filed in May 2015, when prosecutors established that the bank had forced customers into accepting a series of financial products that they either did not need, or they did not request. The complaint suggested that bank employees were instructed to push up to 8 products per household, even though their customers used as many as 6 financial products on average. The investigation led to the uncovering of approximately $2 million in credit card and deposit accounts. Mary Eshet, Wells Fargo’s spokesperson reports that the bank has fired more than 5,000 employees due to the scandal. According to Eshet, the employees were laid off over a period of 5 years.