Wells Fargo & Company (NYSE: WFC) CEO Tim Sloan today sent the following
companywide message to address team member questions and provide updates
on the steps the company is taking to make things right for customers
and build a better Wells Fargo. Sloan’s message to team members reads as
follows:
“In my visits with team members across the country, I continue to admire
the resilience demonstrated by our team in a very challenging year and
the care you show for our customers. At each stop, I’ve received a wide
range of questions about the steps we’re taking to rebuild trust and
build a better Wells Fargo. Many have been asking about our progress in
making things right for customers who may have been harmed by
unacceptable retail sales practices that occurred in our Community Bank.
Today, I want to share with you my answers to those questions.
Q: How far along are we in our efforts to make things right for our
retail bank customers who may have had an unauthorized account opened in
their name?
Thanks to the hard work of many of you, we’re closer to the completion
of these efforts. You’ve succeeded at staying focused on the goal of
making things right for our customers, and our progress has been
significant.
Let’s review our progress in two key areas: identifying those who may
have experienced financial harm and remediating that harm.
In terms of identifying customers, over the past 10 months we have
reached out directly to tens of millions of our consumer and small
business customers to let them know we want to address any concerns they
have about impacts from unacceptable retail sales practices.
We also established a dedicated hotline – 1-877-924-8697 – and an online
resource center at www.wellsfargo.com/commitment
for up-to-date information on this issue.
In addition to this direct outreach, we engaged a third party to conduct
a detailed analysis of our current and former customers’ accounts to
help identify potential harm. The final stage of that analysis is nearly
complete.
A principle guiding our work to identify potential harm was to err on
the side of our customers. This is important because the analysis is
data-driven and looks at usage patterns in accounts. Since usage
patterns of some authorized accounts opened with a customer’s consent
can be similar to some unauthorized accounts, the analysis could not
definitively determine if proper authorization occurred. That’s why we
decided the analysis would identify potentially unauthorized
accounts in order to err on the side of the customer.
These efforts, plus others, have resulted in customer refunds or
payments to date exceeding $5 million. This reflects your responsiveness
to our customers’ concerns, which has included an enhanced resolution
process that expedites customer inquiries about unauthorized accounts.
We also have offered mediation services to our customers at no cost to
them.
Additionally, we reached a $142 million class-action settlement for our
customers that covers concerns about retail sales practices and
unauthorized accounts dating back to 2002. The settlement, which has
received preliminary approval from the court, also will provide
remediation to customers who experienced harm to their credit ratings.
As a reminder, a timeline of our progress to date has been posted
on Wells Fargo Stories
.
Q: What’s left to do for Wells Fargo to complete this remediation
process?
The next step will occur within a few weeks. That’s when we’ll announce
the completion of the expanded retail account analysis, conducted by a
third party, for 2009 through 2016. Again, this analysis examined
account usage patterns and is constructed to err on the side of the
customer in determining which accounts are included as potentially
unauthorized.
Following completion of this review, fees or charges incurred on
potentially unauthorized accounts that were identified will be refunded.
These customers will receive letters informing them that they are
receiving either a refund check from Wells Fargo or a credit to their
existing account.
Also, in the coming weeks, notices about the class-action settlement
will be sent to current and former customers. The notices will provide
information about the process for making claims, and customers who
believe they should be included in this settlement will be able to
submit claims under this broad and far-reaching settlement agreement.
We’ve heard customers’ concerns about potential harm to credit scores
due to unauthorized accounts, and that’s why an important part of this
settlement is remediation to customers for increased borrowing costs due
to credit-score impact associated with a potentially unauthorized
account.
Finally, we are working to compile a list of customers who complained
that an account was opened without their consent, and those customers
will be notified and automatically enrolled in a portion of the
class-action settlement.
Our retail banking account analysis, the class-action settlement, broad
customer outreach and resolution of customer complaints are all very
meaningful milestones and will help us fulfill our commitment to make
things right for customers harmed by improper sales practices in our
Community Bank.
Q: I have seen the phrase “potentially unauthorized” accounts -- what
does “potentially unauthorized” mean?
It’s important for everyone to understand this description, as it has
been an ongoing source of confusion for our stakeholders, including our
team members.
“Potentially unauthorized” does
not
mean we are certain the account is unauthorized. The phrase
“potentially unauthorized” is how we describe the total number of
accounts that a third-party analysis identified as showing patterns that
could indicate a lack of authorization – for instance, if a credit card
wasn’t activated and used. From this number, we identify those accounts
that incurred fees and other costs, and issue refunds and account
credits to make things right for our customers.
Since our analysis was inclusive and erred on the side of the customer,
this group most likely includes a population of accounts that were
authorized by our customers. As I said before, we looked at patterns
that sometimes, but not always, indicate a lack of authorization.
However, we would rather be inclusive and refund the fees on accounts
that were properly authorized than miss accounts that were not
authorized.
What do we mean by err on the side of customers?
It means as we did our work to make things right for our customers, we
took action in our customer’s favor, such as refunding fees even when
the third-party data analysis could not definitively tell us whether an
account was authorized by a customer or not.
While it is likely through the review process we will be refunding fees
and charges on accounts that were properly authorized, it is the right
thing to do. We have confidence that we’ve cast a wide net to reach
customers who may have been harmed by potentially unauthorized accounts.
Let me share some examples:
-
Credit cards were included in the potentially unauthorized
population if not activated, even though it is not unusual for
customers to obtain a credit card as a safety net. For example, most
customers who received a credit card in the mail and didn’t call to
activate the card are included in this group. In fact, unused or
inactive cards were included as potentially unauthorized in our
original analysis that were later activated by our customers.
-
Checking and savings accounts that were considered potentially
unauthorized included those that were opened with a minimum deposit,
then had a withdrawal of the same amount, and no further usage within
certain timeframes. These accounts were included, even though it is
not uncommon for many of our customers to open an account with a
minimum deposit and later elect to withdraw funds or not use the
account.
-
Other credit accounts, such as credit lines, were
included in our analysis based on several factors including if they
were not used, even though we know that people often obtain credit
lines “just in case” and don’t use them.
Q: I saw that we believe the number of customers with potentially
unauthorized accounts may increase significantly. Can you tell me more
about why this number may grow?
Initially, our analysis focused on accounts that were opened during the
timeframe of May 2011 to mid-2015. Now we’re completing an expanded
retail account analysis for 2009 through 2016, including additional
analysis of the original review period. So as our timeframe almost
doubles to an eight-year review period, we can expect our totals for
accounts and dollars remediated to grow.
Again, in our effort to make things right, we want to reach every
customer we can. Identifying potentially unauthorized accounts is one of
the ways we accomplish that goal.
Q: Didn’t we already announce the expanded review of accounts and
actions we’re taking? Why are we seeing news stories that suggest we’re
conducting a new review of accounts?
You may get the impression from some news stories that the expanded time
period for our account review was “new” news. That is not the case.
While the final results will be new once received, we made the
commitment to conduct this analysis over 10 months ago. The strong
public interest in this work is a reflection of the importance we all
place on making things right for our customers. In the spirit of
transparency, we are proactively communicating all of our rebuilding
trust efforts with our stakeholders.
The results of our reviews will generate news headlines, but even as we
face this renewed coverage, the best thing we can do is stay focused on
fixing problems, making things right for customers, and building a
better, stronger Wells Fargo.
Q: Does this complete our review of accounts?
While it does complete the review of accounts by the third party, our
remediation efforts go much further.
Our outreach to tens of millions of customers has been an important part
of our efforts, as is our class-action settlement which covers customer
concerns dating back to 2002. Together, this combination of account
analysis and remediation, customer outreach, the class-action settlement
and resolving customer complaints gives us confidence we will ultimately
take care of any customer who believes they were impacted by
unacceptable retail sales practices.
We continue to encourage any customer to contact us if they believe they
were harmed by an improper sales practice, regardless of when it
happened, so we can work with them to make it right.
Q. What have we done to ensure these sales practice issues don’t
happen again?
We have made many changes in our retail bank branches and contact
centers to help ensure these issues do not happen in the future:
-
Eliminated product sales goals
-
Introduced new compensation and performance management programs that
emphasize customer experience and risk management
-
Changed leadership for the Community Bank
-
Eliminated a layer of management in the Community Bank in order to
bring senior management closer to our customers
-
Strengthened oversight and risk controls
-
Began the roll out of transformational changes to processes, coaching
and customer interaction to take customer experience to a new level
Q. Once this additional review is complete will we be finished with
the sales practices issue and remediation?
We believe our analysis of accounts will be complete. We are going to
spend the next several months issuing refunds and account credits to the
customers we have just identified through our completed analysis and
processing claims submitted in our class-action settlement. And even
after that, we will always welcome any customer who comes to us with a
concern.
Finally, the other work that will continue is making sure that all of
our stakeholders – customers, investors, community and government
leaders, regulators, and you, our team members – are informed of our
efforts. This is an important part of our rebuilding trust commitment.
Q: What can you share about new issues that have emerged, such as
those involving auto loan customers of Wells Fargo Dealer Services?
As we’ve said before, we’re reviewing all of our operations so we can be
confident we have done all that we can do to build a better, stronger
Wells Fargo.
Recent headlines about other customer issues at Wells Fargo reflect the
results of that work – to identify and fix problems, and to be as
transparent as possible in the process.
Q: What can team members do to help take care of customers?
First, encourage any customer who has concerns to call or visit us. And
second, share the information I’m providing in this Team News to
help the communities we serve understand all that we are doing to make
things right for our customers.
While we have more to do, I’m confident our reviews have been thorough
and we’re taking the steps necessary to transform our operations. What’s
more, we are demonstrating that if customers encounter a challenge
working with us today, we are taking action to address their concerns.
I look forward to reporting more progress in the months ahead.”
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, insurance, investments, mortgage, and
consumer and commercial finance through more than 8,500 locations,
13,000 ATMs, the internet (wellsfargo.com)
and mobile banking, and has offices in 42 countries and territories to
support customers who conduct business in the global economy. With
approximately 271,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was ranked No. 25
on Fortune’s 2017 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at Wells
Fargo Stories.
Cautionary Statement About Forward-Looking Statements
This news release contains forward-looking statements about our future
financial performance and business. Because forward-looking statements
are based on our current expectations and assumptions regarding the
future, they are subject to inherent risks and uncertainties. Do not
unduly rely on forward-looking statements as actual results could differ
materially from expectations. Forward-looking statements speak only as
of the date made, and we do not undertake to update them to reflect
changes or events that occur after that date. For information about
factors that could cause actual results to differ materially from our
expectations, refer to our reports filed with the Securities and
Exchange Commission, including the discussion under “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2016, as
filed with the Securities and Exchange Commission and available on its
website at www.sec.gov.
