Wells Fargo & Co. (WFC) made headlines last week after it fired 5,300 employees who opened phony accounts to make bonuses. Here’s what we know about the account scandal as of today:
1. Millions of Accounts Were Created Secretly
Federal regulators said on Thursday that employees of Wells Fargo created millions of unauthorized credit card and bank accounts without customer permission. Employees had been creating these ghost accounts since 2011.
The bank agreed to refund $5 million in fees that were wrongly charged to its customers.
Approximately 10% of the employees who were fired were managers, according to the company’s CFO.
The bank alleges that it has already refunded $2.6 million in fees for approximately 115,000 phony accounts. That translates to about $25 per account.
2. The Bank Has Dropped Its Product Sales Goals
To stem future problems, Wells Fargo announced on Tuesday that it removed product sales goals for consumer bankers starting January 1.
“We want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers,” said CEO John Stumpf.
Wells Fargo employees told CNN that they were under pressure to meet goals that were unrealistic, or lose their jobs as a result.
The elimination of the retail sales goals represents a major internal shift at Wells Fargo, who had set an internal goal of selling a minimum of eight financial products to each customer. The goal was known as the “Gr-eight initiative.”
3. Wells Fargo Management Says the Company Can Adapt
The bank has already agreed to pay $185 million in fines, and the Senate Banking Committee has scheduled a hearing for September 20. Stumpf has been asked to appear.
But the bank’s management asserts that it can adapt to the changes needed to handle the scandal.
“I think we can pivot this in a way that protects our business model,” said CFO John Shrewsberry.
