Wells Fargo just announced it is totally revamping its compensation model for retail banking beginning January 1, 2017.
“We believe this decision is both good for our customers and good for our business,” Wells Fargo CEO John Stumpf said. “We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”
This change comes just after the Consumer Financial Protection Bureau levied the largest fine in its history — $100 million — against Wells Fargo Thursday for the "widespread unlawful" practices of employees who opened more than 2 million fake accounts to get sales bonuses.
Wells Fargo faced $185 million in fines, and fired 5,300 of its employees. Now, however, it is taking a step that no one expected: it will completely revamp the employee compensation plan and eliminate all product sales goals in retail banking, effective January 1, 2017.
The announcement of scandalous behavior from Wells Fargo [and its workers] is not uncommon.
HousingWire's own Senior Financial Reporter Ben Lane said that the Wells Fargo fake accounts fiasco serves to prove that big banks didn’t learn anything from the financial crisis.
Just last month, the big bank needed to pay out $3.4 million to customers for a mailing error.
And a few months prior, just in May, the CFPB took action against a former Wells Fargo employee for an illegal mortgage fee-shifting scheme.
Late last year, Wells also needed to repay Houston homeowners $5.4 million after foreclosing on a home without righteous ownership.
And Wells Fargo also agreed earlier this year to a $1.2 billion settlement with the Department of Justice over charges that it violated the False Claims Act with its Federal Housing Administration lending from 2001-2010.
According to the Department of Justice, Wells Fargo admitted, acknowledged and accepted responsibility for, among other things, certifying to the Department of Housing and Urban Development, during the period from May 2001 through December 2008, that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not, resulting in the Government having to pay FHA insurance claims when some of those loans defaulted.
Stumpf recently told The Wall Street Journal that the fault does not lie in the bank’s systems or culture, but rather with bad employees.
Of course, that poses one important question: why change the compensation plan?