Wells Fargo is having a tough time making it right for the thousands of customers it harmed, reportedly sending out communications with wrong information to 38,000 customers who were forced into auto insurance they didn’t want or need.
According to a report in The Wall Street Journal, two people briefed on the matter said the bank has even sent refunds to people who weren’t even customers, notified customers of refunds that were in the wrong amounts and informed some customers that they were getting refunds even though they never had the auto insurance that created the problem.
“We are focused on making things right for our customers and ensuring this large-scale remediation happens correctly and as quickly as possible,” Catherine Pulley, a spokeswoman for Wells Fargo, told WSJ. Pulley said that an outside vendor in charge of the auto insurance issue found a coding mistake that resulted in the incorrect letters being sent out, and that the bank is working with the vendor to make sure “these customers receive the appropriate communication –including any refunds they’re eligible for.” The spokeswoman confirmed that Wells Fargo sent a check to one non-customer.
At the time of the report, Wells Fargo hasn’t even started to issue refunds to the as many as 110,000 customers who were charged with fees and high-interest rates in the mortgage department. The report also comes along with a move by the Federal Reserve to take the rare step of not allowing the bank to grow in size or scope beyond the slightly less than $2 trillion on the books, in effect curbing asset growth beyond 2017 – a limit that will remain in place until “sufficient improvements” are made that address “widespread consumer abuses.” This move is unprecedented, as the Fed has never before placed limits on how large a company can get.
As has been widely reported, Wells Fargo has been under fire for opening accounts without customer permission, and also for signing consumers up for auto insurance they neither requested nor needed.
The bank is still permitted to lend funds and take deposits. In reference to corporate governance, Wells has two months to boost board oversight and compliance efforts. Three board members are on track to be replaced by April, and a fourth by the end of 2018.