NY regulator subpoenas Wells Fargo over unwanted auto insurance
NEW YORK: New York state’s banking and insurance regulator has issued subpoenas to two Wells Fargo & Co units after the bank admitted to charging several hundred thousand borrowers for auto insurance they did not ask for or need, causing many delinquencies.
The New York Department of Financial Services is demanding Wells’ loan contracts with New York borrowers, its financing agreements with auto dealers, and agreements between Wells units and insurers, according to copies of the subpoenas that were issued on Tuesday and seen by Reuters.
Unwanted auto insurance is the latest chapter in a monthslong scandal over sales practices at Wells, where employees also created as many as 2.1 million deposit and credit card accounts in customers’ names without their permission.
The New York regulator is also seeking documents showing how and when Wells learned its so- called collateral protection insurance may have been unnecessarily or wrongfully issued.
The bank has to provide the information by August 22.
The regulator sent a separate request for information to National General Insurance Co, which was identified as an underwriter of the insurance in a report into the matter prepared for Wells by consultancy Oliver Wyman. The New York Times obtained a copy of the report.
A Wells spokeswoman declined to comment and National General did not immediately respond to a request for comment.
Wells first became aware of potential problems a year ago, when the auto lending business began receiving an unusually high number of complaints, Franklin Codel, head of consumer lending, said in an interview last week.
The bank said it would refund about US$ 80 million to an estimated 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, including roughly 20,000 whose vehicles were repossessed.
The subpoenas, each of which is nine pages long, were sent to Wells Fargo Bank NA in Saint Louis Park, Minnesota, and Wells Fargo Insurance Services USA Inc in Charlotte, North Carolina.
The subpoenas also request the Wyman consulting firm’s report and any other analyses of policies issued to New York customers.