Following last year’s unauthorized-account scandal, Wells Fargo has announced it will overhaul the high-pressure sales practices employees said encouraged fraud. Meanwhile, an internal investigation of those practices has brought the bank to a near standstill
In an attempt to repair some of the damage done by last year’s unauthorized-account scandal, Wells Fargo will roll out a new compensation structure for its retail banking unit.
The scandal, which broke in the fall, involved the opening of 2 million unauthorized accounts by Wells Fargo employees. Fallout included $185 million in penalties, congressional hearings and the ouster of CEO John Stumpf. Many placed the blame for the scandal on Wells Fargo’s compensation structure, which required employees to meet stratospheric sales goals and which current and former bank employees said drove workers to commit fraud just to stay ahead of the curve.
Now the bank has announced it will roll out a new compensation plan that “eliminates sales goals, measures performance based on customer experience and adds more oversight and risk” management, company spokesperson Mary Eshet told the Wall Street Journal. Escheat said the changes would take time to filter through the bank’s workforce.
Wells Fargo’s board, meanwhile, has started an internal investigation into the company’s practices — an investigation which sources told the Journal has brought the bank to a bit of a standstill.
In November, the bank froze dozens of branch managers, district managers, area presidents and other employees in their positions until further notice, the Journal reported. Essentially, these employees aren’t allowed to apply for other positions at the bank. Sources told the Journal that employees were frozen if they had been interviewed about sales practices in recent months — whether they were found to have committed wrongdoing or not.
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