At Senate hearing, Wells Fargo CEO to vow reforms well underway following accounts scandal
Wells Fargo Chief Executive Timothy Sloan is expected to tell a Senate committee Tuesday that the San Francisco bank has made substantial progress in reforming itself following its accounts scandal.
Sloan will testify before the Banking Committee following the one-year anniversary of the disclosure that bank employees, trying to meet onerous sales goals, created millions of accounts without customer permission.
“The past year has been a time of great disappointment and transition at Wells Fargo because we recognized too late the full scope and seriousness of the problems in our Community Bank,” Sloan says, according to a transcript of his prepared testimony released by Wells Fargo.
“I also want to be clear about another thing: Wells Fargo is a better bank today than it was a year ago. And next year, Wells Fargo will be a better bank than it is today,” the transcript goes on to state.
The committee has asked Sloan to appear before it to give a progress report on what actions the bank has taken since it was announced on Sept. 9, 2016, that Wells Fargo would pay $185 million to regulators after admitting as many as 2.1 million unauthorized checking, savings, credit card and other accounts were created.
Then-CEO John Stumpf appeared before the Senate committee and its House counterpart within a few weeks, during which his leadership and the bank were denounced. He was ousted shortly thereafter and Sloan assumed the post on Oct. 13.
The initial estimate of possible unauthorized accounts was based on a review from 2011 to 2015. Since then, Wells Fargo expanded its review to 2009 through last year and has upped its estimate to 3.5 million.
It also has agreed to settle several class action lawsuits over the scandal for $142 million, and, according to the testimony, is paying $6.1 million in direct refunds for charges and fees related to the unwanted accounts.
Much of Sloan’s prepared remarks highlight actions and changes at the bank that have been previously reported or disclosed, including the adoption of a new employee incentive program based on customer service performance and the elimination of product sales goals for retail bankers.
Sloan says that the bank is on pace to have its retail branches visited 16,000 times by employees posing as customers — so called “mystery shoppers.” Sloan added that he and other senior executive have visited more than 100 branch offices as part of the reform effort.
The bank reported last year it fired 5,300 employees over the sales practices, and the bank has since rehired 1,780 employees “who left the bank during those years,” according to the transcript.
Despite its reform effort, the scandal has taken a toll on the bank’s image. Wells Fargo has reported a decline in new retail account openings since last year. There also has been a steady stream of new disclosures that have further tarnished it.
In July, the bank said it would pay $80 million in refunds to hundreds of thousands of auto-loan borrowers who were forced to pay for bank-purchased auto insurance policies despite having coverage of their own.
Other suits filed over the last year allege a bevvy of additional problems, including improperly changing the terms of mortgage loans for bankrupt borrowers, signing up customers for unauthorized life insurance policies and overcharging small businesses for credit- and debit-card processing services.
The bank’s sales practices were first disclosed in a 2013 Los Angeles Times report.
