There’s nothing like being ordered to pay $185 million in refunds and penalties to get a big bank to change some of its business practices. After its employees allegedly created millions of bogus accounts in an effort to meet sales quotas and earn bonuses, Wells Fargo is putting an end to these controversial goals.
Starting Jan. 1, Wells Fargo will no longer place sales goals on retail banking employees in an effort placate customers weary of the bank after it was found to have pushed employees into opening unwanted accounts, the company announced Tuesday.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction,” CEO John Stumpf said in a statement. “We want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”
In addition to eliminating the goal aspect of banking, Stumpf says the company has “significantly strengthened” training programs, controls, and oversight for employees in recent years.
Bloomberg reports that Wells Fargo asked call center employees last week to temporarily halt cross-selling of financial products.
The actions come less than a week after the CFPB, along with the Office of the Comptroller of the Currency and the Los Angeles city attorney, announced a joint enforcement action putting an end to the years-long probe into Wells Fargo’s practices involving cross-selling products to customers – for example, coaxing a checking account holder to open a credit card.
The consent order [PDF] notes that, since Jan. 2011, Wells Fargo employees regularly misused customers’ personal information, opening nearly two million unwanted accounts and failing to close the unauthorized accounts despite complaints from customers.
These actions, allege the government, were taken as a result of sales targets and compensation incentives offered by the bank.
In order to meet these goals and receive bonuses, employees boosted sales figures by covertly opening accounts and funding them by transferring funds from consumers’ authorized accounts without their knowledge or consent, often racking up fees or other charges.
In all, Wells Fargo opened roughly 1.5 million deposit accounts and 565,000 credit card accounts that may not have been authorized by consumers.
Stumpf, Bloomberg reports, was recently asked to testify on Capitol Hill about Wells Fargo’s alleged misconduct. The Senate Banking Committee plans to hold a hearing Sept. 20 on Wells Fargo.