WASHINGTON (Reuters) – Wells Fargo & Co is unlikely to repay the estimated 600,000 customers who falsely demanded auto insurance until at least 2020, the bank said in a letter to US legislators seen by Reuters.
A Wells Fargo logo is seen in New York City, USA on January 10, 2017. REUTERS / Stephanie Keith
US regulators imposed a $ 1 billion fine on Wells Fargo in April, admitting that they falsely forced motorists into car insurance. Under this agreement, customers' payouts would be completed in months.
"We will contact customers and provide them with multi-stage compensation during the course of 2019, with the final phase scheduled for January 2020," the bank said in a letter dated October 9 to the Supreme Republican and Democratic Senate.
While Wells Fargo is trying to implement a protracted refurbishment, bank managers are also trying to persuade the Federal Reserve to lift a growth restriction introduced by a series of violations of sales practices. Bank managers have said they expect the Fed to increase this capital tie by the first part of 2019.
And while the bank announced auto insurance in July 2017, the amount it expects to repay customers has risen.
In August, Wells Fargo said it expects to repay drivers $ 212 million. The bank had initially estimated that it would pay out a $ 64 million cash settlement if it disclosed the problems.
Drivers who bought a car through Wells Fargo and phased out their insurance could be charged for force-place policies. The bank enrolled about 2 million drivers in such policies and more than a quarter of them were not needed, regulators said.
"We regret how this issue has affected our clients, and we are finalizing our recovery plan, which aims to provide each client with adequate compensation for their individual circumstances, and we look forward to providing our clients with the full compensation, they deserve, "said Catherine Pulley, spokeswoman for Wells Fargo.
Wells Fargo plans to automatically reimburse the insurance for drivers in five states, but requires drivers in other states to qualify for a rebate, the letter said.
The State Law in Arkansas, Michigan, Mississippi, Tennessee, and Washington requires drivers to be able to challenge the policy of forced relocation prior to their indictment, and Wells Fargo said drivers in those states would be wronged.
But drivers in other states must provide evidence that they will be forced into unnecessary insurance before Wells Fargo considers a full refund, such as the letter to Republican Senator Mike Crapo of Idaho and Democratic Senator Sherrod Brown of Ohio.
Wells Fargo pledged to repay customers as part of a $ 1 billion settlement that the bank reached in April with the Financial Supervision Bureau for Consumer Protection (CFPB) and the Office of the Comptroller of the Currency (OCC).
But regulators rejected the bank's disbursement plan this summer and told Wells Fargo that it needed to do more to make sure it could find and repay anyone who was overburdened, Reuters reported in September.
Customers charged for unnecessary insurance may incur overdraft charges, damaged loans or vehicle returns. As part of its settlement agreement, Wells Fargo had to review the banking and insurance papers of these clients for several years.
In the letter, Wells Fargo said it will make "reasonable adjustments" to consumer credit scores, which could have been violated by inappropriate insurance.
Reporting by Patrick Rucker; Editing by Meredith Mazzilli