In the fallout of Wells Fargo’s scandal over unauthorized customer accounts, regulators may force publicly-traded banks to adhere to in-person of sales practices and procedures.
A person familiar with the matter told Bloomberg that many of the biggest U.S. banks have received formal requests from regulators for information concerning sales practices which will be reviewed by examiners going forward.
The new process, which hasn’t yet been made public, comes in the midst of Wells Fargo agreeing to pay $185 million to authorities as a result of the scandal and the bank’s own CEO John Stumpf stepping down.
“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” CFPB Director Richard Cordray stated last month.
“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed. Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”
The intention is to keep what happened at Wells Fargo from happening anywhere else.
Bloomberg noted that banks including JP Morgan Chase and Bank of America has already begun internal reviews of sales practices to ensure employees are not partaking in any illicit behaviors.
Bank regulators are working with other agencies, such as the Federal Reserve, Federal Deposit Insurance Corp. and CFPB, to monitor the sales practices of lenders to prevent the opening of accounts without customer consent.
At a Senate Banking Committee last month, Comptroller of the Currency Thomas Curry told lawmakers that in order to continue enforcing actions against “individual misconduct and culpability” of Wells Fargo officials, his agency has been directed to assess the sales processes and procedures at all large and mid-sized banks.
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