The regulator says the bank needs to tighten pay controls and address thousands of employee grievances
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Wells Fargo has spent the last three years trying to put its house in order, but a top regulator says the scandal-plagued bank isn’t doing enough.
The Office of the Comptroller of the Currency said that Wells Fargo still has poor controls around pay, leading to compensation structures that don’t do enough to prevent wrongdoing, according to a Wall Street Journal report. The bank also has a huge backlog of unaddressed employee complaints, the OCC said.
Citing sources familiar with the matter, WSJ said that the OCC warned Wells Fargo that it needs to address thousands of employee human-resources complaints, and strengthen its policy for clawing back pay from executives. The OCC also said that the bank’s pay controls weren’t tight enough, WSJ reported.
Scandal first erupted for the bank in 2016, when it was revealed that its sales staff had opened millions of unauthorized customer accounts. Pay structure and executive salary clawback policies were major factors in that scandal, according to WSJ; the bank’s board of directors determined that bonuses and unrealistic sales targets encouraged employees to open fake accounts.
The OCC also told the bank that it needed to address about 3,000 unresolved HR complaints, according to WSJ. These complaints likely include protests from fired employees who say they were terminated wrongfully. The bank has fired thousands of low-level employees in the house-cleaning following the fake-accounts scandal, WSJ reported. Many of those employees claimed to have been wrongfully terminated and said that the firing effectively blacklisted them from the banking industry.
A Wells Fargo spokesperson told WSJ that the bank did not comment on “specific regulatory matters.” However, the spokesperson acknowledged that “more work needs to be done” by the bank to meet its regulatory obligations.
Much of that work will fall to CEO Charles Scharf, who came on board in October after a months-long search. Wells Fargo’s numerous scandals had already cost the bank two CEOs, John Stumpf and his successor, Tim Sloan.
Wells Fargo spokeswoman Arati Randolph told WSJ that Scharf is “already making significant changes,” including the appointment of former Satander Holdings USA CEO Scott Powell as chief operating officer. Powell will “focus on regulatory priorities and improve our control and operations functions,” Randolph told the newspaper.
