WASHINGTON: The top US watchdog for consumer finance is seeking a record fine against Wells Fargo & Co that could exceed several hundred million dollars for auto insurance and mortgage lending abuses, according to three sources with knowledge of the plans.
The penalty would be the first issued by Mick Mulvaney, whom President Donald Trump tapped in November to head the Consumer Financial Protection Bureau (CFPB).
The fine would fulfil Trump’s vow to come down hard on the country’s third-largest lender, which has been grappling with a sales practices scandal since September 2016.
The CFPB is readying sanctions alongside the Office of the Comptroller of the Currency (OCC), Wells Fargo’s day-to-day regulator. The agencies are ready to sanction Wells Fargo for layering extra insurance on drivers and collecting commissions on those policies, Reuters reported last month.
Both agencies have also been investigating the bank for wrongly levying fees on mortgage borrowers.
Mulvaney is eyeing a penalty that would settle both those matters and dwarf the $100 million the CFPB fined Wells Fargo in September 2016 to settle its phony accounts scandal, said the sources familiar with the talks. That 2016 fine had been the CFPB’s largest ever.
Settlement terms have not been finalised but Mulvaney is pushing for a figure as high as $1 billion, said three people with knowledge of the discussions.
A stiff penalty against Wells Fargo could burnish Mulvaney’s image as a tough regulator even as his agency has dropped cases against at least two payday lenders.
Mulvaney has said the CFPB has gone too far in policing industry in the past but that abuses do exist.
“I think you’re being naïve if you think there aren’t folks out there who are breaking consumer financial protection laws,” Mulvaney told an industry meeting last month.
Lawmakers will get a chance to question Mulvaney about the settlement talks at two separate hearings in Congress on Wednesday and Thursday. Wells Fargo is due to report earnings on Friday and some officials hoped to have a deal by then.
In the case of Wells Fargo and auto insurance, agency lawyers have raised concerns about how different customers received different treatment from the bank.
Drivers who financed a car through a dealer could be pushed into insurance if Wells Fargo suspected a policy had lapsed. Drivers who went directly to the bank for a loan were not subject to such “force-place” insurance after 2011, the bank
has said. — Reuters
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