Wells Fargo agrees $3bn settlement in fake accounts investigation
Wells Fargo has agreed to pay $3bn (£2.3bn) to settle an investigation by the US government into its fraudulent sales practices.
The US bank admitted to opening millions of fake customer accounts as well as wrongly collecting millions of dollars in fees, misusing customer information and harming the credit rating of customers.
It brings to a close the scandal four years after it first came to light. In that time two chief executives have been forced out and hefty fines have been levied against the firm.
Wells Fargo has also been operating under an order from the US Federal Reserve that limits its growth for the past two years.
Chief executive Charlie Scharf, who took over in October, said the settlement was a “significant step in bringing this chapter to a close”.
“There’s still more work we must do to rebuild the trust we lost,” he said.
“The conduct at the core of today’s settlements – and the past culture that gave rise to it – are reprehensible and wholly inconsistent with the values on which Wells Fargo was built.”
The settlement is regarding activities between 2002 and 2016 when the bank’s employees faced intense pressure to meet “onerous sales goals”.
According to prosecutors, this led to staff conducting illicit activities such as creating fake accounts, selling services customers didn’t need and shifting money between accounts.
Senior managers at Wells Fargo’s consumer division were aware of the practices as early as 2002, they said.
“This case illustrates a complete failure of leadership at multiple levels within the bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” US Attorney Nick Hanna said.
“We are hopeful that this $3bn penalty, along with the personnel and structural changes at the bank, will ensure that such conduct will not reoccur.”
Around $500m of the $3bn is to be returned to investors who were misled by bank disclosures.
Wells Fargo will be monitored for three years for compliance under a deferred prosecution agreement, the US Department of Justice said.
It means charges will be dismissed if the conditions of the settlement are abided by.