Wells Fargo agrees to pay $575 million to settle lawsuits stemming from fake accounts scandal

The company had already been forced to pay $1.2 billion as a result of the banking practices

(REUTERS)

Wells Fargo has agreed to pay $575 million to settle lawsuits stemming from an investigation across the US into allegations that bankers opened fake accounts without customer knowledge and engaged in other questionable business practices.

The agreement stipulates that the bank must create teams that will review and respond to customer complaints about Wells Fargo sales and banking practices.

The settlement, reached with consultation from the attorneys general from all 50 states plus the District of Columbia, was announced on Friday.

The bank has been under scrutiny since 2015, when it admitted that employees had opened millions of fake accounts without customer knowledge in order to meet sales goals, and also sold auto insurance and financial products to people who did not need those products.

Since then, the company has already been forced to pay more than $1.2 billion in penalties, and also is under stricter regulations governing its practices.

“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” Tim Sloan, the CEO of Wells Fargo, said. Mr Sloan had previously apologized for the fake accounts scandal during a Congressional hearing in 2017.

The settlement money will be distributed around the country, with California — where the bank is headquartered — receiving a quarter of the funds.

The attorney general of that state, Xavier Becerra, admonished the company’s behaviour as “disgraeful” in a statement.

“Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future,” Mr Becerra said.

He continued: ”Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products - from bank accounts to insurance - that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.“

The Associated Press contributed to this report