Wells Fargo is expected to be slapped with sanctions over auto insurance policy commissions after making thousands of people take on auto insurance they didn’t want or need.
According to the report in Reuters citing people with direct knowledge of the probes, the sanctions are stemming from the fact that Wells Fargo profited from an insurance program that impacted more than a half a million people. Wells Fargo has blamed a vendor for putting the auto insurance on top of the loans of auto borrowers. At the time, which was in July, it didn’t disclose that it received payouts in the form of commissions when the auto insurance policies were written, noted Reuters.
The report noted that the Office of the Comptroller of the Currency (OCC), which is the main regulator of Wells Fargo, has been asking the company which executives were aware of the commissions and whether or not they could have been halted sooner than they were. A Wells Fargo spokeswoman declined to comment, but said Wells Fargo received commissions from insurance partners via a program that was ended in 2013. “We are sorry for any harm caused and are focused on the important work to complete our remediation process,” said spokeswoman Catherine Pulley. Reuters noted that the bank disclosed in a Securities and Exchange Commission filing that it is looking into abuses in its auto insurance unit going back as far as 2005. It calculated it will have to refund $145 million to borrowers and adjust the account balances by an additional $37 million. Initially, it had thought the costs associated with the auto insurance scandal would be $80 million, noted the report.
If a settlement is reached in the auto insurance abuses scandal, people familiar with the probe told Reuters, it would likely be a joint action from regulators. For example, the mortgage case launched by the Consumer Financial Protection Bureau could be combined into the joint action. A resolution will likely come with financial penalties, reported Reuters, noting the amount of the settlement has not been figured out yet.