Wells Fargo is in deep trouble. This time instead of a credit card scandal, it’s insurance. Workers at the bank forced an estimated 2.1 million customers who purchased an automobile to pay for unnecessary insurance. Some of them could not afford the extra cost and it sent them into a financial space where the auto had to be repossessed.
The company fired 70 executives over the mistake.
All this comes a year after Wells Fargo settled a decade old suit over issuing credit cards customers didn’t want. The firm settled with regulator for $185 million.
A suit has been filed over this scandal which put 250,000 of the 2.1 million customers into delinquency and caused 25,000 vehicles to be repossessed. One of the plaintiffs claims the reason the insurance was put into place was to get a kickback from National General Holdings for placing the business.
The insurer has not been sued.
One of the lawyers involved is Roland Tellis. He said, “The revelation of this latest breach of customer trust appears to fit right into the Wells Fargo playbook of dirty deeds, and sadly comes as no surprise.”
Senate Banking Committee Democrat Sen. Sherrod Brown of Ohio and House Financial Services Democrat Rep. Maxine Waters of California want Wells Fargo’s Chairman Stephen Sanger and CEO Tim Sloan to testify as to what happened.
Both have sent letters to the Wells Fargo execs. Brown’s said, “Members should have the opportunity to question Mr. Sloan about the bank’s progress in addressing the damage it did to its customers.”
Wells Fargo’s consumer lending head Franklin Codel said, “We take full responsibility for our failure to appropriately manage the CPI program. The bank has publicly promised that it will do better. Our actions over the past year show we are acting on this commitment.”
Source links: Insurance Business America — link 1, link 2, Insurance Journal — link 1, link 2, Carrier Management, PropertyCasualty360.com