Regulators set to announce a $1 billion penalty on Wells Fargo Friday for improper mortgage fees and charging unwitting customers for auto insurance
Federal regulators are set to slap Wells Fargo with a $1 billion penalty for abuses such as charging unwitting customers for auto insurance and bogus mortgage fees.
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency plan to announce the penalty as part of a settlement on Friday, according to the New York Times. Wells spokesman Oscar Suris declined comment.
It would be the highest fine ever imposed by the consumer bureau and could reduce the banking giant’s first-quarter profit by about 20%, according to research firm Edward Jones.
The bank announced in July that it would give refunds to more than 570,000 auto loan customers who were charged for auto insurance without their knowledge and when they already had coverage.
Wells Fargo also has said that it improperly charged some customers to extend interest rate locks on mortgages because of delays that it caused, not the clients. In October, the company said it would give refunds to customers who paid the fees between September 16,2013 and February 28,2017.
The $1 billion fine would be the latest setback for Wells Fargo. Last year, it acknowledged that it created about 3.5 million bank and credit card accounts that were not authorized by customers and paid $185 million in penalties.
The Federal Reserve this year imposed restrictions on Wells Fargo’s growth and advocated a shakeup in its board of directors. The company agreed to the sanctions and said they could cut profits by as much as $400 million this year.
The company also faces a possible separate investigation into whether its wealth management division made improper referrals or recommendations to the company’s investment and fiduciary services businesses. Wells Fargo said it’s conducting an internal review of that issue.
For the first quarter, Wells Fargo reported net income of $5.9 million, or $1.12 per share, on $21.9 billion in revenue. That topped analysts’ estimate of $1.11 per share.
