U.S. regulator knocks its own handling of Wells Fargo sales scandal
By Patrick Rucker and Pete Schroeder
WASHINGTON (Reuters) - Wells Fargo & Co (WFC.N: Quote) and its U.S. bank regulator discussed complaints of high-pressure sales tactics as early as 2010 but officials took no action for years, according to the regulator's review of the scandal.
Bank examiners "failed to follow-up on significant complaint management and sales practices issues," according to an internal review from the Office of the Comptroller of the Currency which oversees many national banks.
The report released on Wednesday ended a seven-month evaluation of how the OCC failed to halt a scandal in which thousands of Wells Fargo employees created as many as 2 million customer accounts without their consent.
The Wells Fargo board of directors was alerted in 2005 that bank tellers were being fired because they created phantom accounts, according to the report.
Five years later, Wells Fargo and bank examiners met to discuss what was motivating bank tellers to continue to create accounts without customer authorization.
There were 700 cases of whistleblower complaints from Wells Fargo employees at that time, the report said.
In that January 2010 meeting, Carrie Tolstedt, the former head of community banking, credited Wells Fargo's internal controls for catching the fraud.
"The primary reason for the high number of complaints is that the culture encourages valid complaints which are then investigated and appropriately addressed," the report said of Tolstedt's explanation. Continued...