Wells Fargo Agrees to Pay $1 Billion to Settle Customer Abuses
Wells Fargo & Co has agreed to pay $1 billion to settle with U.S. regulators who said it abused customers in its auto and mortgage businesses, the bank and regulators said on Friday.
The settlement is the most aggressive move by regulators during the Trump administration to punish a major bank and follows revelations that the third-largest U.S. lender had opened millions of sham retail accounts that customers did not want.
Wells Fargo said the settlement reduces its reported first-quarter 2018 net income by 16 cents per share to 96 cents per share. The bank said it has adjusted its preliminary results to account for an additional accrual of $800 million.
The bank said it would be required to submit, for review by its board, plans detailing efforts to strengthen compliance and risk management, and its approach to customer remediation.
The fine was split between two regulators of the lending industry. U.S. Office of the Comptroller of the Currency (OCC) imposed $500 million of the overall $1 billion fine.
The regulators said Wells Fargo agreed to the settlement without admitting or denying any wrongdoing.
The OCC’s penalty reflects a number of factors, including the bank’s failure to develop and implement an effective enterprise risk management program to detect and prevent the unsafe or unsound practices, and the scope and duration of the practices, it said in a statement.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them,” Wells Fargo president and chief executive Timothy J. Sloan said in a statement.
The second regulator in the action, the U.S. Consumer Financial Protection Bureau, said WellsFargo broke the law in layering insurance on drivers and excessive fees on homeowners locking in home loan interest rates.
The CFBP said the bank will also have to refund customers.
Reuters had reported on Thursday that the bank was close to settling the record fine.
Last Friday, Wells Fargo warned when reporting its preliminary quarterly results that it may restate results to reflect the final settlement.