Wells Fargo reaches $3bn fake accounts settlement

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Wells Fargo, a major US bank, has agreed to pay $3bn (£2.3bn) to resolve a government investigation into its sales practices, including opening fake customer accounts.

The bank admitted it had wrongly collected millions of dollars in fees, misused customer information and harmed the credit rating of customers.

The settlement comes about four years after the scandal first erupted.

It has already forced out two chief executives and led to hefty fines.

Since 2018, Wells Fargo has been operating under an order from the US Federal Reserve that limits its growth.

Charlie Scharf, who became chief executive in October, said the settlement was a “significant step in bringing this chapter to a close”.

“There’s still more work we must do to rebuild the trust we lost,” he added.

“The conduct at the core of today’s settlements – and the past culture that gave rise to it – are reprehensible and wholly inconsistent with the values on which Wells Fargo was built,” he said.

The settlement concerns activities that date back more than 15 years ago. The prosecutors said the bank’s intense focus on growth and pressure on staff to meet “onerous sales goals” ultimately led workers to create fake accounts, sell services that customers did not need, and shift money between accounts, among other illicit activities.

Top managers of Wells Fargo’s consumer division were aware of the “gaming practices” as early as 2002, they said.

“This case illustrates a complete failure of leadership at multiple levels within the bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” US Attorney Nick Hanna said.

“We are hopeful that this $3bn penalty, along with the personnel and structural changes at the bank, will ensure that such conduct will not reoccur.”

The US Department of Justice said the bank would be monitored for three years for compliance, under a deferred prosecution agreement.

If the bank abides by the conditions of the settlement, including ongoing cooperation, the charges will be dismissed.


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