On top of $1 billion fine, Wells to draft plan for remediation of harmed customers

A total of $1 billion in fines plus restitution – with restitution yet to be determined – was ordered to be paid by Wells Fargo Bank, N.A., over abuses and unsafe practices related to its auto-loan collateral insurance program and mortgage interest-rate lock program, the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) said Friday.

Under consent orders coordinated by the two agencies, Wells is assessed  civil money penalties (CMPs) of $1 billion by the CFPB and $500 million by the OCC. It must wire the $1 billion owed to the CFPB within 10 days and will get $500 million of that back once it pays the OCC fine. The bank is also required to establish compliance management and risk management programs that address deficiencies identified by the OCC; and to review the abusive practices to determine how much to pay to how many customers who were economically or otherwise harmed by Wells’ practices.

The consent orders state that since 2005, Wells had a policy of force-placing collateral protection insurance on auto loans when borrowers did not purchase their own. For hundreds of thousands of customers, it continued to maintain those policies even after borrowers obtained their own coverage. The CFPB order states that Wells also acknowledges that for at least 27,000 customers, the added costs of the force-placed insurance “could have contributed to a default that resulted in the repossession of their vehicle.”

Wells also is cited for inappropriately charging customers for mortgage interest-rate-lock extension fees, including when delays in mortgage processing were Wells’ responsibility.

Wells has 60 days to submit for review a compliance risk management plan and comprehensive remediation plans for compensating harmed customers.

Bureau of Consumer Financial Protection Announces Settlement with Wells Fargo for Auto-Loan Administration and Mortgage Practices

OCC Assesses $500 Million Penalty Against Wells Fargo, Orders Restitution for Unsafe or Unsound Practices