Wells Fargo’s Board of Directors has released the results of its independent investigation into sales practices in the company’s Community Bank, and CEO Tim Sloan called the findings “a critical part” of the company’s ongoing effort to rebuild trust.
“The Board’s report is a necessary examination of what went wrong in our culture, operations, and governance,” he said. “It’s clear from the Board’s review that we had an incentive program and high-pressure sales culture in our Community Bank that over time drove behavior that in many cases was inappropriate and inconsistent with our values. Because of our decentralized operating model, our corporate leadership took too long to understand the seriousness and scope of the problem, and, as a result, the actions we took over the years to address it weren’t adequate.”
Steve Sanger, the Board’s chairman, announced the findings of the review by law firm Shearman & Sterling in a news release and email to all Wells Fargo team members. The Board’s report explains the operating practices at Wells Fargo and sales performance pressures within the company’s Community Bank that allowed the unacceptable retail sales practices that were the subject of settlements in September with the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, and the City Attorney of Los Angeles.
“We are confident that we have identified the root causes of the improper practices that occurred, as well as the people responsible for them, and we have taken appropriate actions,” Sanger said in the companywide message, reaffirming the Board’s confidence in Sloan and his leadership team’s efforts to fix issues. “We believe the company has a strong foundation to serve our customers and earn back the trust of all of our key stakeholders.”
Read the Board’s full report on wellsfargo.com.
Over the coming days, Sloan said, Wells Fargo leaders and team members will be looking deeply into the report and reflecting both on the progress already made and the work left to be done to make the company better every day.
Highlights of the significant actions taken to date include:
- Reaching out to 40 million retail and 3 million small business customers through statement messaging, other mailings, and online communications asking them to contact us with any concerns about their accounts; reviewing 94 million customer accounts; refunding $3.26 million in fees incurred by potentially unauthorized deposit, credit card, and line of credit accounts; and agreeing in principle to a $110 million class action settlement.
- Eliminating product sales goals for retail bankers who serve customers in bank branches and call centers, creating new incentive and compensation plans focused on customer service and team rather than individual performance, and raising the minimum wage base range for entry-level team members in the United States.
- Electing a new Chief Executive Officer and independent Chairman to lead the Board of Directors, and naming a new head of the Community Bank.
- Strengthening the company’s risk framework, and establishing multiple internal offices and positions to increase oversight and support a transition to a better bank. These include:
- A new Office of Ethics, Oversight and Integrity
- A dedicated office to oversee a companywide Rebuilding Trust program
- A new Change Leader position in the Community Bank
- Established a process to enable former team members to request a termination review by a dedicated Employee Relations team regarding termination or resignation allegedly due to sales performance/culture reasons. Those who are eligible for reemployment have an opportunity to work with a special recruiting team to identify and explore opportunities for reemployment with Wells Fargo.
- Offering customers multiple new ways to address sales practice or potential unauthorized account issues with Wells Fargo, including through free mediation, participation in a class-action settlement, and an expanded customer complaint servicing and resolution process.
“Nothing is more important to Wells Fargo’s future than ensuring we have a culture and operating model that works for all our stakeholders — our customers, team members, investors, and communities,” Sloan said. “With that principle in mind, we will ensure this report becomes a powerful complement to the ongoing self-examination of our culture and practices that we have been conducting as a leadership team and a company.”