Wells Fargo examining products for financial harm to customers
new york — Wells Fargo & Co is examining whether it caused unnecessary financial harm to customers through mortgage fees, frozen deposit accounts and “addon” products like identity theft protection, the bank said in a US securities filing on Friday.
The disclosures signal that the bank’s problematic sales practices go further than investors and analysts had expected after Wells reached a regulatory settlement in September over unauthorised customer accounts.
“We were surprised that this wasn’t disclosed when the original sales practices were disclosed,” said Piper Jaffray analyst Kevin Barker. “Given the scope of the issues out there, it seems like the cost of the insurance would be bigger than the $80 million of remediation already in place.”
Wells Fargo shares dropped 1.3 per cent to $52.70 in afternoon trading. Wells, the third-largest US bank by assets, discovered the new issues as part of a third-party consultant’s review required by the settlement. It expects that review to be complete in the third quarter.
Wells is focusing on whether fees it charged to extend interest rate lock periods on residential mortgages, as well as its practice of freezing or closing deposit accounts for suspected fraud, caused undue harm to customers. It is also looking at how it tacked products like identity theft protection and debt protection onto other accounts.
The disclosures come a week after the bank said it charged 570,000 auto borrowers for insurance they did not want, pushing 274,000 of them into delinquency, and leading to at least 20,000 wrongful repossessions.
In the new disclosures, Wells Fargo said it has also identified issues with guaranteed automobile protection waivers and insurance agreements with dealers that may lead to refunds beyond the $80 million in customer compensation it detailed last week. — Reuters