Wells Fargo Bank, N.A. has agreed to a $1 billion penalty issued by the federal government for how it charged certain borrowers for mortgage interest rate-lock extensions and the way it administered a mandatory insurance program related to its auto loans, the Consumer Financial Protection Bureau (CFPB) announced.
In the largest settlement ever produced by the CFPB, Wells Fargo consented to remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The bank will be credited $500 million assessed in a separate action by the Office of the Comptroller of the Currency (OCC).
“I am especially pleased that we were able to work closely and effectively with our colleagues at the OCC, and I appreciate the key role they played in the negotiations,” CFPB acting director Mick Mulvaney said in a release announcing the enforcement action. “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
A part of the consent order requires Wells Fargo to submit, for review by its board, plans detailing its ongoing efforts to strengthen its compliance and risk management, and its approach to customer remediation efforts.
“For more than a year-and-a-half, we have made progress on strengthening operational processes, internal controls, compliance and oversight, and delivering on our promise to review all of our practices and make things right for our customers,” Wells Fargo President and CEO Timothy J. Sloan said in a release.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” Sloan added. “Our customers deserve only the best from Wells Fargo, and we are committed to delivering that.”
The OCC said it found deficiencies in Wells Fargo’s compliance risk management program “that constituted reckless unsafe or unsound practices and resulted in violations of the unfair practices prong of Section 5 of the Federal Trade Commission Act.”
The agency said it acted because of the “severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner.”
As part of the consent order, the OCC reserved the right to take additional supervisory action, including imposing business restrictions and making changes to Wells Fargo’s executive officers or members of the bank’s board of directors.