Wells Fargo To Stop Giving Branches A Heads-Up Before Inspections

Image courtesy of Mike Mozart

Wells Fargo has rightly concluded that it should overhaul a lot of its sales practices after the fake account fiasco that cost the company $185 million in refunds and penalties and could cost it $4 billion in lost business. One change that the bank announced today is that it will no longer give branches a heads-up a day before corporate inspectors are scheduled to arrive.

During the company’s decade-long fake account fiasco, where impossible sales quotas led bank employees to illegally open additional accounts without customers’ permission, a lack of surprise inspections meant that branch managers had the opportunity to forge needed signatures and destroy any incriminating documents ahead of time. They typically had 24 hours’ notice or more before an inspection.

After a report in the Wall Street Journal today about the practice, a Wells Fargo spokeswoman announced that the practice will stop, and the bank will no longer alert branches before inspections.

If managers were able to destroy documents before an inspector visited, that could help explain how the registration of fake accounts was able to continue for so long while upper management didn’t know, or pretended not to know.