Former Wells Fargo chief banned for life

Former Wells Fargo chief executive John Stumpf has been banned from the banking industry and will cough up US$17.5 million for his role in the fake accounts scandal that has continued to rock the world's fourth largest bank since 2016.

The Office of the Comptroller of the Currency (OCC) has also charged five former Wells Fargo executives over their role in the bank's "systematic sales practice misconduct", which saw employees open millions of fake bank and credit card accounts to meet sales targets.

The OCC has settled with the bank's former chief administrative officer and director of corporate human resources Hope Hardison, as well as former chief risk officer Michael Loughlin for their roles in the sales misconduct.

The civil charges brought by the federal agency allege that the bank's executives "failed to adequately perform their duties and responsibilities, which contributed to the bank's systemic problems with sales practices misconduct from 2002 until October 2016", with fines for the eight former employees amounting to US$58.5 million.

"The misconduct of these individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower level bank employees," the head of the OCC Joseph Otting said in a statement.

"The actions announced by the OCC today reinforce the agency's expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations."

Current Wells Fargo chief executive Charlie Scharf responded to the statement in a letter to the bank's employees.

"We are reviewing today's filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals," he said.

"Wells Fargo will not make any remaining compensation payments that may be owed to these individuals while we review the filings."

Scharf accepted the OCC's new charges.

"The OCC's actions are consistent with my belief that we should hold ourselves and individuals accountable. They also are consistent with our belief that significant parts of the operating model of our Community Bank were flawed," he said.

"At the time of the sales practices issues, the company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct."

Scharf said the bank had undergone major changes over the last three years.

"Over the past three years, the company has made fundamental changes to its business model, compensation programs, leadership, and governance," he said.

"We are committing all necessary resources to ensure that we operate with the strongest business practices and controls, maintain the highest level of integrity, and have in place the appropriate culture.

"The company is different today, but we know we still have significant work to do to regain the trust of all stakeholders."

During revelations of the scandal unfolding in 2017, the bank admitted to opening more than 3.5 million fake bank and credit card accounts, as well as forcing borrowers to buy auto insurance they didn't need and illegally repossessing the vehicles of hundreds of military service members.

The bank refunded customers US$6.1 million for the unauthorised accounts, as well as nearly a million dollars over online bill pay enrollments.

Read more: Wells FargoOCCJohn StumpfJoseph OttingCharlie ScharfHope HardisonMichael Loughlin
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