Wells Fargo is in hot water yet again. The nation’s largest mortgage lender has disclosed that it may have charged more than half a million car buyers for unwanted insurance – pushing many of them into defaults and repossessions.
Wells Fargo may have charged more than 500,000 customers for unnecessary insurance, Bloomberg reported. The revelation isn’t helpful to a bank in the midst of an effort to restore its public image after scandals involving fake accounts and changing mortgage terms without customer authorization.
“The steady drip of revelations is concerning, as it makes quantifying and qualifying the extent of the internal control failures difficult,” Compass Point Research & Trading analyst Isaac Boltansky told Bloomberg. “Which is worrisome for both Washington and Wall Street.”
According to Bloomberg, an internal review of Wells Fargo’s auto lending found that more than half a million clients may have paid for insurance, without knowing it, while making monthly auto loan payments – even though they already had their own auto policies. Wells Fargo said last week that it may pay out as much as $80 million to affected customers – with extra money to as many as 20,000 who lost cars to default – “as an expression of our regret.”
But regret may not be enough. The bank’s scandals are coming so fast that one treads upon another’s heels – and that’s shaking many experts’ confidence in Wells Fargo’s management.
“What has been shown is that the bank was run for superior revenue growth, and the controls around managing that were clearly insufficient,” Atlantic Equities analyst Christopher Wheeler told Bloomberg. “Management changes may have to be more extensive to try and shake off the new and lower-quality reputation.”
Wells Fargo already ousted former CEO John Stumpf in the wake of its fake-accounts scandal, in which it was revealed that bank employees had opened millions of accounts without customers’ knowledge or approval.
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