Wells Fargo says it is changing a policy singled out by legislators this week in a letter to bank CEO Tim Sloan.
In their letter, six members of the Senate Banking Committee refer to a Wall Street Journal report that branch employees were allegedly asked to work late in order to shred and doctor documents after managers received early warnings that their branches would be visited by internal compliance officers.
Without denying or admitting to the allegations, Wells Fargo explains that it plans “to eliminate the policy that allows branches to get advance notice before annual visits by internal reviewers” by March 31, according to a statement.
“This policy was originally in place so each branch could ensure it is staffed to assist with the review and maintain customer experience,” the bank explained. “It is important to note that for nearly 10 years, Wells Fargo has pulled digital copies of new account forms and signature cards to review them in advance of branch visit reviews with no advance notice to team members.”
On Wednesday, Sen. Elizabeth Warren, D-Mass., and her colleagues asked Sloan to respond by Feb. 17 to 15 questions about the branches being tipped off to upcoming inspections as well the possible destruction and concealment of evidence tied to the bank’s recent fake-accounts scandal.
“We are troubled by the possibility that Wells Fargo’s retail bank branch managers engaged in activities that made it easier to conceal fraudulent practices that hurt both customers and employees,” they said in the letter.
This news comes less than a week after Warren asked the Department of Labor for an update on its investigation into Wells Fargo & Co.’s sales practices; she and others were unable to access a website the DOL had set up to track complaints from the bank’s employees.
“We are also concerned that Wells Fargo’s internal review system was allowed to operate with serious flaws for years, remains flawed, and lacks appropriate controls to prevent future harm to the bank’s customers,” the senators said in the letter. “It is also not clear precisely when senior management or the board became aware of these issues.”
Wells Fargo was fined $185 million for violations of regulations related to its unauthorized opening of about 1.5 million deposit accounts and 565,000 credit card accounts. It also paid a $20 million penalty to the Treasury Department.
“Thousands of mostly low-level Wells Fargo employees were fired as a result of the fraud despite evidence that senior managers knew or should have known about the fraud,” the legislators stated.
For its part, the bank says it is making “additional improvements” to its retail operations, noting that it ended product sales goals in October 2016 and launched a new compensation plan “focused on customer experience for branch team members” in January 2017.
Wells Fargo adds that its “expanded controls will include about 4,000 mystery shops per quarter in 2017, which gather information on customer experience and conduct risk.”
In addition, the bank says it will conduct “unannounced branch visits for conduct risk exams … and [stage] increased branch visits by the internal audit team.”
It also is working with “independent third parties” to find other areas to rectify. “We look forward to addressing the senators’ concerns,” the bank stated.
The senators signing the letter, in addition to Warren include Bob Menendez, D-N.J.; Sherrod Brown, D-Ohio; Chris Van Hollen, D-Md.; Catherine Cortez Masto, D-Nev.; and Jack Reed, D-R.I.
— Check out Senators Ask Wells Fargo CEO to Explain Alleged Fraud Cover-Up on ThinkAdvisor.