Wells Fargo sets out to re­build clients’ con­fi­dence

In wake of scan­dal, bank says it will end prod­uct sales goals

USA TODAY US Edition - - MONEY - Mike Snider @mikesnider USA TO­DAY

Wells Fargo said Tues­day it will end bank­ing prod­uct sales goals at the end of this year, a move to help re­build con­sumer con­fi­dence af­ter the com­pany was hit last week with a fine for se­cretly open­ing mil­lions of fake ac­counts for cus­tomers with­out their per­mis­sion.

One of the na­tion’s largest banks, Wells Fargo was fined $185 mil­lion last week by the Con­sumer Fi­nan­cial Pro­tec­tion Bu­reau, Trea­sury Depart­ment and the city and county of Los An­ge­les for em­ploy­ees open­ing more than 2 mil­lion de­posit and credit card ac­counts that may not have been au­tho­rized by con­sumers.

The San Fran­cisco-based bank said it has ter­mi­nated about 5,300 em­ploy­ees over a five-year pe­riod for their in­volve­ment with the unau­tho­rized ac­counts, which work­ers made to meet sales goals and tar­gets. The find­ings stem in part from an L.A. County Su­pe­rior Court law­suit filed last year.

Wells Fargo CEO John Stumpf said the com­pany took the step to al­lay con­sumer con­cerns. “We are elim­i­nat­ing prod­uct sales goals be­cause we want to make cer­tain our cus­tomers have full con­fi­dence that our re­tail bankers are al­ways fo­cused on the best in­ter­ests of cus­tomers,” he said in a state­ment re­leased by the bank Tues­day.

“The elim­i­na­tion of prod­uct sales goals rep­re­sents an­other step to re­in­force our ser­vice cul­ture, helps en­sure that noth­ing gets in the way of our abil­ity to achieve our mis­sion and is con­sis­tent with our com­mit­ment to pro­vid­ing a great place to work,” he said.

Shares of Wells Fargo fell more than 3% Tues­day. The Wall Street Jour­nal re­ported Mon­day that Wells Fargo had in­structed some em­ploy­ees to stop cross-sell­ing mul­ti­ple bank prod­ucts. Wells Fargo says this “di­rec­tive” is only a tem­po­rary ac­tion.

That makes more sense than a year-end cut­off, said Erik Oja, an­a­lyst at S&P Global Eq­uity Re­search. “I was a lit­tle bit sur­prised,” he said. “I think that it’s some­thing that should be ef­fec­tive im­me­di­ately.”

The Se­nate Bank­ing Com­mit­tee plans a hear­ing Sept. 20 to in­ves­ti­gate the mat­ter in­volv­ing the na­tion’s largest bank, based on stock mar­ket value.

In a let­ter Mon­day to Sen. Richard Shelby, R-Ala., chair­man of the com­mit­tee, five Demo­cratic se­na­tors in­clud­ing Sen. El­iz­a­beth War­ren, D-Mass., said they want to learn “how it is pos­si­ble that more than 5,000 em­ploy­ees could bilk cus­tomers over the course of five years.”

Many ques­tions re­main to be an­swered, Oja says. “We want to know why it was so wide­spread and where are their sys­tems to catch that?” he said. “It wouldn’t have both­ered me one bit if it had been five peo­ple in a rogue of­fice. But the fact that it is so wide­spread, it’s ter­ri­ble.”

Unau­tho­rized cus­tomer ac­count ac­tiv­ity peaked in 2013, and two-thirds were con­cen­trated in the south­west U.S., said John Shrews­berry, Wells Fargo chief fi­nan­cial of­fi­cer, speak­ing Tues­day at Bar­clays’ 2016 Global Fi­nan­cial Ser­vices Con­fer­ence in New York.

Of the 5,300 em­ploy­ees fired in con­nec­tion with the ac­tiv­ity, 10% were man­agers or higher-level em­ploy­ees, he said.

“The anal­y­sis with all the data is still on­go­ing,” Shrews­berry said.

The com­pany’s an­nual cy­cle of op­er­a­tional risk-loss re­views will be “an op­por­tu­nity to take a big, wide, fresh look at who knew what and when, and what else might have been done,” he said.


A branch in New Jer­sey pre­pared for a trop­i­cal storm on Sept. 4. Now, the bank faces a firestorm in the Se­nate.

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