Wells Fargo & Co (NYSE:WFC) is expected to be slapped with a penalty amounting to $1 billion by federal regulators over abuses that include bogus mortgage fees and charging unwitting motor insurance customers. Per the New York Times the penalty will be announced by Office of the Comptroller of the Currency and Consumer Financial Protection Bureau as a part of the settlement that has been reached.
This is the biggest fine that has ever been imposed by Consumer Financial Protection Bureau. The penalty is likely to reduce the first-quarter profit of the giant lender by around 20% per Edward Jones, a research firm.
Last year in July the lender disclosed that over half a million auto loan customers who had been charged for motor vehicle insurance without their consent and knowledge even when they had their own coverage would get refunds. Additionally the bank has indicated that customers who were improperly charged in order to ensure mortgage interest rate locks were extended would get refunds and this would apply to the customers were charged the fees between fourth quarter of 2013 and the first quarter of 2017.
Besides the latest $1 billion fine Wells Fargo also paid penalties amounting to $185 million last year after acknowledging that 3.5 million credit card and bank accounts were created without the authorization of customers. Earlier this year the Federal Reserve also imposed restrictions on the growth of Wells Fargo as it called for the lender’s board of director to be shaken up. Wells Fargo consented to the sanctions while projecting that it would lead to a $400 million fall in profits this year.
The San Francisco, California-based lender is also being investigated separately over whether its wealth management unit made improper recommendations or referrals to the fiduciary and investment services business of the company.
This comes in the wake of American Federation of Teachers announcing that it would remove Wells Fargo from the list of mortgage lenders it recommended over the bank’s ties to National Rifle Association and gunmakers.
“We can only assume that, in light of your silence and the NRA attacks, you have decided that the NRA business is more valuable to you than students and their educators are,” wrote the President of American Federation of Teachers, Randi Weingarten to Wells Fargo CEO Tim Sloan.