(Bloomberg) -- Wells Fargo can adapt to adjustments needed to deal with claims the bank opened 2 million customer accounts without authorization, violations that weren’t revenue-generating, Chief Financial Officer John Shrewsberry said.
“We think we can adapt our business model, take sales goals out and still have a growth culture with people trying to deepen relationships with customers,” Shrewsberry said Tuesday at a conference in New York. “I think we can make this pivot in a way that protects our business model.”
Chief Executive Officer John Stumpf, 62, was asked to testify in Washington on the bank’s alleged misconduct after it agreed to pay $185 million in fines over claims that it opened the unauthorized accounts. The San Francisco-based company eliminated sales goals, effective Jan. 1, and instructed U.S. call center workers to temporarily halt cross-selling of financial products.
“These bad practices were not a revenue-generating activity, it was really more at the lower end of the performance scale where people apparently were making bad choices to hang on to their job,” Shrewsberry said. “Ninety-nine percent were getting it right, 1% of people in community banking weren’t.”
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The penalty is the largest ever imposed by the Consumer Financial Protection Bureau.
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The adviser was also ordered to pay $300,000 to cover Wells Fargo's legal fees.
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Client claimed that adviser's recommended strategy earned fees and commissions for the bank but wrecked his inheritance from his great grandfather.
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The CFO said about 10% of the 5,300 employees terminated as a result of the problem were managers. The bank refunded $2.6 million in fees for about 115,000 unauthorized accounts, or about $25 per account, he said. Two-thirds of those affected were in the U.S. Southwest, according to Shrewsberry.
Wells Fargo increased staffing at call centers to deal with an expected increase in customer questions and complaints about the matter, and “got very little feedback,” Shrewsberry said.
