Wells Fargo has agreed to pay $575m to settle claims made by attorneys general from all 50 US states and the District of Columbia that the bank opened fake accounts and followed certain dubious practices.
The latest settlement comes after the bank agreed to pay $190m in 2015 to settle federal government claims of creating fake customer accounts without their knowledge, and improperly referring and charging customers for various financial services products, Reuters reported.
Wells Fargo settlement
At that time, the bank also admitted that it sold auto insurance and other financial products to customers who didn’t need them.
The settlement reached with the attorneys general pertains to previously disclosed retail sales practices, auto collateral protection insurance (CPI) and guaranteed asset/auto protection (GAP), and mortgage interest rate lock matters.
The bank noted that it has been working with federal regulators to address the issues and that it is remediating affected customers.
Wells Fargo CEO and president Tim Sloan said: “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”
Pursuant to the terms of the agreement reached with the attorneys general, the bank will deploy special teams to review and respond to customer complaints related to banking and sales practices.
As of the end of third quarter of this year, the company had accrued $400m of the settlement amount and expects to allocate the balance $175m by the end of the fourth quarter.
Earlier this year, the US bank was fined $1bn by federal regulators for consumer mistreatment. The company also settled a $480m class-action lawsuit brought by investors.
Troubles at the US lender
This is not the only fine Wells Fargo has had to pay recently. In addition, the bank was slapped with a penalty of $65m for its cross-selling business model, sales practices, and publicly reported cross-sell metrics.
The bank reached the settlement with New York Attorney General Barbara Underwood.
Furthermore, its employees are at risk of great unsettling as 1,000 of them are set to be laid off. This is part of the firm’s plan to reduce its workforce by 10% by 2020.
The retrenchment will affect the bank’s Consumer Lending and Payments, Virtual Solutions and Innovations segments.
Most of the affected employees have received 60-day notices, while some were given pre-notices, which confirm that they will receive the termination notice next year.