U.S. regulators are prepping to sanction Wells Fargo & Co. for the commissions the lender received due to its forced-insurance policy that led to half a million customers being charged for insurance they hadn’t requested, according to a published report.
In August 2017, Wells Fargo confirmed that its collateral protection insurance policy — which identifies consumers who lack auto insurance and charges them automatically — falsely charged 570,000 borrowers, sent 274,000 into delinquency, and resulted in 20,000 repossessions. At the time, Wells Fargo agreed to $80 million in remediation to affected customers. However, the Office of the Comptroller of the Currency (OCC) found that amount to be “insufficient,” according to a document that was leaked last October.
The OCC, Wells Fargo’s primary regulator, is reportedly asking the bank’s executives if they knew about the payouts and if they could have been stopped sooner, according to the report. People familiar with the matter told Reuters that the fact that Wells Fargo stood to profit from the insurance program “will form the backbone of fresh sanctions against the bank.”
National General — the coverage provider attached to the scandal — claims that it was in the right and was being “thrown under the bus” by Wells, an insurance analyst told Auto Finance News last September.
While Wells Fargo does not comment on regulatory matters, a Wells Fargo spokeswoman told AFN that Wells Fargo’s collateral protection insurance remediation is an “ongoing program,” and the number of impacted customers and refund estimates will change “as part of our thorough commitment to fix any errors and make things right.”
“We are sorry for any harm caused and are focused on the important work to complete our remediation process,” she added.
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