The staff at the Office of the Controller of the Currency has recommended enforcement action against Wells Fargo & Co. for improperly charging consumers for auto insurance, according to Reuters.
The recommendation was made to the acting chief of the OCC Keith Noreika, who will take the next few weeks to decide on whether to endorse the enforcement, deny the suggestion, or possibly wait until the Senate confirms former banker Joseph Otting to the permanent position.
The Consumer Financial Protection Bureau is also investigating the matter and considering further fines, as Auto Finance News has previously reported. Both Wells Fargo and the OCC declined to comment to Reuters about ongoing supervisory and regulatory matters.
Separately, Wells Fargo’s President and Chief Executive Timothy Sloan answered questions before the Senate Banking, Housing, and Urban Affairs Committee today, addressing the bank’s response to both the increased number of fake checking accounts and the auto insurance scandals.
“It was a significant mistake that harmed a lot of people, and we are making it right,” Sloan said in his prepared opening remarks. “Last month, we began issuing checks to affected auto-loan customers, all of whom we expect to reimburse by the middle of 2018.”
However, Democratic Senator Brian Schatz of Hawaii questioned the intent of those payouts. Wells Fargo is requiring impacted consumers to fill out a form and submit a claim that guarantees these consumers $2,000 — no questions asked.
“Why not just cut checks up to $2,000 for all of those impacted?” Schatz asked. “Because the only reason I can think of to put the burden on consumers to ask for this goodwill money is that you’re hoping many of them won’t do it.”
The company is giving $500 to all of the 570,000 consumers it identified as potentially impacted regardless of whether they were actually affected or not, Sloan responded. An earlier report suggested the number of impacted consumers could be as high as 800,000. Those making a claim that they have been impacted are guaranteed at least $2,000 in remediation and can seek more depending on the claim, Sloan added.
Additionally, Senator Sherrod Brown (D-OH) remarked on the timeline of events leading up to the public disclosure of the insurance scandal.
“Every day, since you’ve been the head of Wells Fargo for the past 11 months, you have made the decision not to disclose this information to the public,” Brown said. “Your company knew about the auto insurance policy when your former CEO Mr. [John] Stumpf testified, so when did you know and why did you think it was OK to keep covering it up?”
Sloan reiterated the timeline previously reported: The investigation into the force-placed insurance policy began in July, by late August or early September the company discontinued the policy, and in the third quarter disclosed it to regulators.
Yet, that did little to satisfy Brown, who said, “That it took the company and you personally 13 months to disclose such a violation of the public trust makes me incredulous.”
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