Wells Fargo Pulls Back on Cross-Selling After Fraud Scandal
Wells Fargo has reportedly decided to temporarily scale back on cross-selling products as it deals with the fast-moving aftermath of allegations that bank employees opened more than 2 million unauthorized accounts to hit sales targets.
In an alert sent out on Friday, the company told a number of call center employees to “please suspend referrals of products or services unless requested by customers until further notice,” according to The Wall Street Journal. Wells Fargo (WFC) said it was doing so because of “high call volumes,” and would review whether or not to continue with the suspension this Friday. The instruction does not apply to workers at its bank branches, Bloomberg noted.
Meanwhile, the Senate Banking Committee on Monday announced it would hold a hearing on the allegations, with Wells Fargo CEO John Stumpf asked to testify and several bank executives scheduled to brief the panel next Tuesday, the Journal reported.
The bank is also planning to make performance and incentive adjustments by the end of September, Bloomberg reported. The developments come days after the Consumer Financial Protection Bureau (CFPB) and two other regulators announced they would fine Wells Fargo $185 million—the largest penalty ever imposed by the CFPB—citing the bank’s own estimates in statements that employees applied for about 565,000 credit cards and 1.5 million deposit accounts that customers may not have signed off on.
Wells Fargo has fired 5,300 employees over the incident, but it has yet to publicly deny or admit to any wrongdoing.
Also on Monday, Fortune’s Stephen Gandel reported that Carrie Tolstedt, who led the community banking division where the fraudulent accounts were allegedly opened, was leaving the bank with a $124.6 million payday. While the bank called her departure a “personal decision to retire,” many have demanded a substantial “clawback” on Tolstedt’s back pay.
The scandal has drawn ire from politicians, who are calling for Wells Fargo to take greater accountability for the abusive practices. “We should accept nothing less than a full and transparent explanation of what went wrong, who is responsible, how to fix it and how to prevent such fraud in the future,” Democratic senators wrote on Monday.
Democratic presidential nominee Hillary Clinton released a statement last week, saying “there is simply no place for this kind of outrageous behavior in America, and I applaud the Consumer Financial Protection Bureau for its forceful response.”
Despite the outcry, the director of the CFPB said on Monday he wouldn’t characterize Well Fargo’s practices as symptomatic of a broader problem. According to Reuters, Richard Cordray said he doesn’t see the same problems occurring “on any kind of systematic basis at any other bank.”