US Regulators Send Wells Fargo Back to the Drawing Board on Plan to Repay Auto Insurance Clients

Wells Fargo has had a lot of issues throughout the course of the past few months. However, their latest setback has stemmed from a debunked plan to right some of their wrongdoing. Last week, US regulators denied the bank’s plan to pay back auto insurance clients. Officials stated the reason behind the denial was that the bank needed to make more of an effort to find every driver affected by their negligence.

The plan was given to US regulators in June of 2018. This deadline was required in addition to a $1 billion settlement that was reached in April. The departments involved include the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).

Aggressive sales targets became the scapegoat excuse behind the overall scandal, which affected around 600,000 drivers throughout the United States. The scandal found that Wells Fargo employees were opening accounts, that reached millions, in client’s names without their knowledge.
Since that time, the investigation has shed light on other misappropriations, including mortgage lending and wealth management. However, the specific abuse that this plan was meant to rectify with the present plan was strictly to repay auto insurance clients.

The reason for the disapproval of the plan was representatives were not convinced the plan did enough to identify victims. Their quantifiable reasoning is that there were over two-million offending policies created within the time frame of the scandal. Yet, only 600,000 victims were identified. Officials do not believe that all 2 million people were victimized. However, the evidence shows that most of these aggressive policies were unnecessary.

Currently, officials are investigating the work behind the numbers of the plan. Instead of trusting the plan itself, regulators are taking a good look at how the bank developed the plan. This should either exonerate the plan or prove there is a more accurate form of calculating the victim total.

In 2017, after the scandal broke and victims were identified, Wells Fargo estimated they would need $64 million in restitution. However, lawyers for the victims were quick to respond that their figure is far too low to even be considered.