Wells Fargo ‘can’t promise’ end to scandals as reviews go on
The battering Wells Fargo has taken over the past year from multiple scandals in its consumer operations might not be finished, CEO Tim Sloan said.
“We’ve been very focused on opening every drawer and turning over every rock in the company,” Sloan said Tuesday at an investor conference in New York, where many of the questions focused on recent damage to the bank’s reputation. “I can’t promise you that it’s exactly over with.”
Sloan, 57, said other problems could be found by consultants the San Francisco-based lender hired to review business units outside the retail bank, where a sales scandal erupted a year ago. While Wells Fargo will spend an “elevated” amount on consultants during the third quarter, those expenses should ease during the final quarter of 2017, according to a presentation on its website. The lender previously said it was spending $70 million to $80 million a quarter.
Wells Fargo remains in hot water with customers and politicians over its fake accounts scandal after revealing two weeks ago that possibly a million more customers were affected than earlier estimated. The lender is also facing legal backlash from borrowers who said they were charged fees for the bank to lock in promised rates on new mortgages and others who were hurt by its auto-lending division billing for unwanted car insurance.
The firm, which has faced racial discrimination allegations, is trying an alternative approach suggested by a professor at Harvard.
Attorneys are preparing written objections to the settlement, which they may file in the next 15 to 30 days.
Regulators are contacting the bank after financial details of some 50,000 clients were inadvertently sent to an outside party, according to a person with knowledge of the matter.
Wells Fargo said last month it would pay $10.7 million to compensate customers for employees opening accounts in their names without permission. That includes $7 million of refunds and $3.7 million for what it described as the “complaints process/mediation.” The firm may also pay as much as $80 million to those affected by the auto insurance debacle, with extra money for as many as 20,000 who lost cars.
Wells Fargo has finished combing through more than 165 million deposit and credit-card accounts to find those that may have been unauthorized, Sloan said. Changes such as eliminating sales incentives and reducing layers of management “will limit the likelihood” of further damage to the bank’s reputation, he said.
“We will be reporting more progress in the months ahead that will no doubt result in additional headlines,” Sloan said in his first public presentation to Wall Street since the bank acknowledged incorrectly charging more than 500,000 auto-loan customers for the insurance. “And I certainly can’t promise perfection in the future.”