Wells Fargo has seen U.S. regulators turn down its plan to pay back customers who purchased auto insurance they didn’t need.
Reuters, citing three sources familiar with the matter, reported that the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) told the bank that it has to do more to make sure it has located and compensated everyone impacted by the practice.
In June, Wells Fargo submitted the plan to regulators as part of a $1 billion settlement it reached with the CFPB and the OCC. Regulators deemed that the plan, which could involve reaching 600,000 drivers, needed to include more assurances that the bank will find them all and pay them back.
Reuters noted that customers who were charged with the unnecessary auto insurance were also hit with overdraft fees, and saw their credit scores damaged or their vehicles repossessed. Under the settlement terms, Wells Fargo has to go back several years to ensure the customers are being fully compensated.
In its plan, the bank did provide regulators with the number of customers who were hurt, the financial impact and how it plans to compensate them, but the OCC wants to see how Wells came up with the calculations. Reuters noted that there is no deadline for when the regulators need to sign off on the plan.
The report comes amid another probe of the national bank. Earlier in September, The Wall Street Journal reported that the Justice Department has opened an investigation into possible fraud committed at the company’s wholesale banking unit, which works with the bank’s corporate customers. Quoting unnamed “people familiar with the matter,” WSJ said the probe follows “revelations that employees improperly altered customer information,” including adding information such as Social Security numbers to documents without those employees’ consent.
The alleged document mishandling occurred late last year and into early 2018, said the report. The documents were tied to the business banking group, which operates as part of the wholesale banking operation, where those corporate clients have top lines in the range of $5 million to $20 million. Similar issues have arisen with middle-market firms and corporate trust services.