Reportedly, Wells Fargo & Co (NYSE:WFC)’s overaggressive sales strategy has come under investigation radar. Both the Office of the Comptroller of the Currency and the San Francisco Federal Reserve have started separate scrutiny into the bank’s sales strategy, which is alleged to be questionable and unfair.
The regulators are probing if the bank pushed its employees too hard to cross-sell its products and paid little attention to the unfair practices undertaken with the sole intention of attaining sales targets. The enquiry into the Wells Fargo & Co (NYSE:WFC)’s sales affairs come on the backdrop of a legal suit filed by the Los Angeles City Attorney in May this year.
The investigation revolves around the issues, which were highlighted in the lawsuit. The bank has long been using cross-sell technique, which dates back to the late ‘90s. One among the several cross-selling initiatives includes “Gr-eight”, which allowed employees to cross-sell up to eight solutions to customers. The regulators are now determining if such initiative truly did any good to the bank’s customers or was merely a way for the bank to maximize its profits.
In middle of allegations
Further, the regulators are exploring if the bank’s high-pressure selling was limited to a certain region or team or was undertaken across all departments and regions. Meanwhile, the bank’s representative has kept mum over the regulatory probe and has rebuffed the allegations made in the lawsuit.
The lawsuit filed in May slapped charges on Wells Fargo & Co (NYSE:WFC) that its employees misused the customers’ personal information to open unauthorized bank accounts with the intention to meet the sales targets. Moreover, the banking officials failed to close such unauthorized accounts despite customers’ complaints. Also, the lawsuit alleged the employees carried out several unauthorized activities at the cost of customers’ interests while the bank turned a blind eye to all such unfair practices.
As the bank battles with the charges, its stock managed to rise by 0.11% to $55.10 during the previous session.