SAN FRANCISCO--(BUSINESS WIRE)--In testimony today before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Wells Fargo & Company (NYSE: WFC) President and Chief Executive Officer Tim Sloan, once again apologized to customers and team members who were affected by improper sales practices in its Community Bank and pledged to continue the transformative changes made across the company over the last year. Sloan updated members of the Committee on the progress he has initiated and overseen at Wells Fargo since taking over as CEO last fall.
“The past year has been humbling and challenging. We are resolving past problems even as we make changes to ensure nothing like this happens again at Wells Fargo. We are doing this by strengthening our culture, holding leaders accountable, and improving our business practices and risk management,” Sloan said in his testimony.
Transforming the Community Bank
Wells Fargo has made dramatic improvements to the operations and culture of its Community Bank over the last year. In addition to appointing Mary Mack as the new head of the Community Bank, Wells Fargo has restructured its retail bank leadership across the country. A new compensation and performance plan that rewards retail team members for excellent customer service, risk management, and team performance - not for selling products - has been implemented, and hiring and training programs have been revamped. Additionally, the bank has increased base pay for entry-level team members.
Making it Right for Customers
In the last quarter of 2016, Wells Fargo reached out to more than 40 million retail and 3 million small business customers, asking them to contact us with any concerns about their accounts. The company continues to issue refunds to every affected customer who has responded or who was identified during the third-party review of accounts and has already paid approximately $7 million in refunds to Community Bank customers. Customers also may receive compensation under the recent $142 million class-action settlement for claims dating back to 2002. After deducting plaintiffs’ attorneys’ fees and costs of administration, the class-action settlement will provide reimbursement of fees not already refunded and compensation for increased borrowing costs related to credit-score impact associated with a potentially unauthorized account.
“I want to be clear that Wells Fargo is committed to addressing every concern any customer may have about an unwanted product or service—no matter where or when it may have occurred,” said Sloan in his testimony.
Accountability & Operational Excellence
Sloan outlined important accountability actions taken by Wells Fargo’s leaders over the last year as well as changes to the company’s structure to ensure more robust risk and compliance practices. Line of business leaders now follow a more centralized model in which risk, compliance, and human resources have far greater visibility into, and accountability for, issues across the individual business lines. In addition, Wells Fargo established a Conduct Management Office that has enterprise-wide responsibility for investigations and complaints and reports each month to the company’s executive team.
“Wells Fargo is a better bank today than it was a year ago. And next year, Wells Fargo will be a better bank than it is today,” said Sloan.
Sloan also discussed today the details of a comprehensive review of sales practices and other customer-facing operations across the bank that he launched last fall, going beyond the requirements of Wells Fargo’s regulatory consent orders. Additionally, Wells Fargo announced in August the result of a broader look into 165 million accounts opened at the bank between 2009 and 2016. The estimate of potentially unauthorized accounts grew by about 1.5 million. However, these are not “new” instances of possible misconduct since last fall; they are newly revealed instances of possible misconduct based upon the expanded investigation of the years before 2017.
During the past year, Wells Fargo also identified and rectified issues in its auto loan business related to Collateral Protection Insurance placed by a third party. Last month, the bank began issuing checks to affected auto loan customers and should complete reimbursement of those customers by the middle of 2018.
Sloan concluded his testimony by reiterating that the company is committed to continuing to make necessary changes to its operations and to putting customers first.
“The entire Wells Fargo team, all 270,000 of us, is committed to making things right for customers the bank let down. This is a big job, and we will get it right,” said Sloan.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 271,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.