OCC: Wells Fargo a “Repeat Offender” Against Consumer Rights
A recent letter from the Office of the Comptroller of the Currency slams Wells Fargo & Co., and warns it may be taking federal enforcement action against the financial institution for a host of wrongs in its mortgage and auto insurance operations.
The Wall Street Journal reports the federal regulator, in a letter submitted last month, accused the bank of willfully causing its customers harm. The bank has been given the opportunity to respond. The financial giant is alleged to have failed repeatedly to take corrective action on known problems in a broad range of its consumer services – beyond just mortgage lending and auto insurance.
The bank refused to comment on the letter publicly, telling the WSJ it is continuing with its commitment to fixing existing problems, working closely with its risk management teams to rebuild trust from both consumers and employees. The OCC turned down the opportunity to comment further on the pending regulatory action.
The letter that was submitted was primarily concerned with the irregularities in the two aforementioned sectors. You may recall several months ago, when the bank even admitted that over a period of several years, it required consumers who financed their motor vehicles through the bank to also purchase collision insurance coverage that was not necessary. That practice affected some 600,000 consumers. As a result of this additional coverage, an estimated 20,000 motorists had their cars unlawfully repossessed when they couldn’t keep up with the improper insurance payments.
For this wrongdoing, the bank has promised to provide $100 million in monetary reimbursements to the consumers and make $30 million in account adjustments related to this action.
It also was just a few months ago that it was revealed (and the bank admitted) that it charged wrongful interest rate commitments to some consumers whose mortgage was backed by Wells Fargo. The bank has promised to contact some 110,000 customers who paid nearly $100 million in erroneous fees. Those customers should expect refunds, though bank representatives say they don’t expect to pay out quite as much because investigation of the fees is ongoing and it is believed some marked as wrongful were actually proper.
The enforcement action the OCC is considering is what is referred to as a cease-and-desist order, also sometimes called a consent order. It essentially outlines a wide range of formal enforcement proceedings the federal government has when it discovers deficiencies in a financial institution’s operations that are serious, uncorrected or not safe and sound. Usually in these cases, the consent order will list a number of steps the bank can or must take in order to address these shortcomings, and it must do so by a given deadline.
All of this, of course, comes on the heels of the revelation last year that Wells Fargo created some 3.5 million fake or unauthorized customer accounts. That resulted in a $35 million fine, and the bank was also required to build and maintain an effective company-wide risk management strategy to prevent sales practices that aren’t sound.
These newer allegations not only further stain the bank’s reputation, they could provide good information for future consumer rights litigation.
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