Wells Fargo Bank NA will pay $575 million to U.S. states to settle claims related to sales practices that violated state consumer protection laws, attorneys general announced Dec. 28. The settlement encompasses the bank's sales issues related to its 2016 fake account scandal and auto insurance and mortgage interest rate lock matters.
The settlement involves attorneys general from 50 states and the District of Columbia. It is the "most significant engagement" by state attorneys general acting without a federal law enforcement partner that involves a national bank, according to a press release from the office of Iowa Attorney General Tom Miller.
The settlement will resolve civil claims that the state attorneys general could have otherwise brought related to previously disclosed issues at the bank. As part of the settlement, Wells Fargo will maintain a website and designated team to review and respond to customer inquiries on these issues. It will also provide periodic reports to the states on the progress of its remediation efforts. The bank is working separately with federal regulators to address and correct these issues.
Wells Fargo & Co. had accrued $400 million of the settlement amount by the end of the third quarter and expects to accrue the remaining $175 million in the fourth quarter, according to a bank news release.
"This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank," Wells Fargo President and CEO Tim Sloan said in a statement.
The settlement adds to the more than $1 billion in fines that Wells Fargo has agreed to pay to federal regulators in relation to its various scandals. The bank also has a consent order outstanding and remains under an asset cap that the Federal Reserve imposed in February. Executives have said they expect it to be in place through the first part of 2019.
Regulatory interest in Wells Fargo has remained high in the two years since the initial announcement of the fake account scandal. In early October, Comptroller of the Currency Joseph Otting told Congress he was "not comfortable" with the bank's progress in refunding customers who were forced to buy unnecessary auto insurance policies. In late October, the bank placed two senior executives on leaves of absence due to regulatory reviews.