A leading US bank is to pay $1bn – the largest fine imposed since Donald Trump became president – as punishment for selling customers car insurance they did not need and charging them unnecessary mortgage fees.
In the latest in a series of scandals to hit the country’s third-largest bank, Wells Fargo will pay the sum as part of a settlement agreed with the Consumer Financial Protection Bureau (CFPB). However, none of the money will go to the victims of the bank’s actions.
According to the deal that was reached, the San Fransisco-based bank, which was founded in 1852, will pay $500m each to the CFPB and the Office of the Comptroller of the Currency. The fine is the first imposed by the bureau under Mick Mulvaney, who Mr Trump appointed to take over the consumer watchdog agency in last November.
The $500m is also the largest penalty imposed by the CFPB in its history, and matches the largest fine ever handed out by the Comptroller of the Currency, according to the Associated Press.
“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,” said Mr Mulvaney. “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
The fines relate to the bank’s car loan and mortgage customers. Last summer, Wells Fargo admitted that hundreds of thousands of its car loan customers had been sold car instances they did not require. Reports said that in countless cases, customers fell behind on their payments as a result of their additional costs and resulted with having their cars repossessed.
In a separate case, the bank also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.
“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,” Wells Fargo Chief Executive Tim Sloan in a statement.
The fine announced Friday was not directly link to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as many as 3.5m bank and credit card accounts without getting customers’ approval.
Following that scandal, the bank was fined $200m by the CFPB in September 2016. The bank has been under investigation for other practices since then.