Wells Fargo & Co., in a settlement agreement with the California Department of Insurance, has agreed to not transact any new business during the remaining term of its two insurance licenses, which expire in July and September 2020, respectively.
In addition, Wells Fargo agreed to pay a $10 million penalty related to the settlement of allegations of improper insurance sales practices related to the company's online insurance referral program. The bank also agreed to not apply for a license for at least two years following the expiration of its current licenses.
Out of the $10 million penalty, $5 million is due immediately. Wells Fargo will pay the remaining $5 million if it decides to re-enter the state's insurance marketplace. The California Department of Insurance could also refuse to issue a new license, according to a press release.
The department in 2017 alleged that Wells Fargo units Wells Fargo Bank NA and Wells Fargo Insurance Inc. issued about 1,500 insurance policies to bank customers between 2008 and 2016 without their knowledge or permission.