The bank had failed to meet the requirements of a 2018 consent order and has violated Section 5 of the Federal Trade Commission Act
Wells Fargo in Laredo, Texas. (Credit: Billy Hathorn/en.wikipedia.)
Wells Fargo has been ordered by the Office of the Comptroller of the Currency (OCC) to pay $250m in penalty over the bank’s unsafe practices in paying back customers who were charged excessive fees.
According to the US banking regulator, the bank had failed to meet the requirements of a 2018 consent order and has violated Section 5 of the Federal Trade Commission Act.
OCC has identified deficiencies in the bank’s reckless practices in the compliance risk management programme and informed the bank of its findings.
In addition to the fine, the regulator has issued a Cease-and-Desist Order against the bank, over its failure to establish an effective home lending loss mitigation programme.
Acting Comptroller of the Currency Michael J Hsu said: “Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable.
“In addition to the $250 million civil money penalty that we are assessing against Wells Fargo, today’s action puts limits on the bank’s future activities until existing problems in mortgage servicing are adequately addressed.
“The OCC will continue to use all the tools at our disposal, including business restrictions, to ensure that national banks address problems in a timely manner, treat customers fairly, and operate in a safe and sound manner.”
Under the Cease-and-Desist Order, the bank will undertake corrective actions to improve the execution, risk management, and oversight of the loss mitigation programme.
It restricts the bank from acquiring certain third-party residential mortgage servicing.
Also, the order requires the bank to ensure that borrowers are not transferred out of the bank’s loan servicing portfolio until remediation.
In 2018, Wells Fargo has agreed to make a $1bn settlement with regulators, who found the bank had wrongly layered insurance on drivers and charged improper fees on homebuyers.
Last year, the bank has agreed to pay $3bn to resolve civil and criminal probes into the company’s fraudulent and high-pressure sales practices.
Wells Fargo chief executive Charles Scharf said: “Our work to build the right foundation for a company of our size and complexity will not follow a straight line.
“We are managing multiple issues concurrently, and progress will come alongside setbacks. That said, we believe we’re making significant progress.”