Wells Fargo cutting sales goals in wake of $185M fine

Ken Sweet
Associated Press

New York — Wells Fargo will cut its aggressive product sales goals for retail bankers, as it faces $185 million in fines and a damaged reputation after allegations that it opened millions of unauthorized accounts to meet those targets.

The sales goals will be eliminated by Jan. 1, the San Francisco-based bank announced Tuesday. That doesn’t end the matter, though, as Wells Fargo’s chief executive has been called to appear before the Senate Banking Committee next week.

In announcing the fines last week, regulators said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that customers may not have authorized, and that money in their accounts was transferred to the new accounts without authorization.

Debit cards were issued and activated, as well as PINs created, without telling customers. In some cases, employees even created fake email addresses to sign up customers for online banking services, regulators said.

Wells Fargo has always sold itself as first and foremost a community bank. But as one of the nation’s biggest financial institutions, executives highlight every quarter the so-called cross-sale ratio, a metric only Wells used that reflects the number of products the bank sells to each customer. The ratio hovers around six, which means every Wells Fargo household has on average six different types of products with the bank.

The targets, pushed from Wells’ top executives, were unrealistic. Wells Fargo had a program called go for “Gr-Eight,” a company-wide push to get more than eight products per household — a level that was never reached. Many employees had to cheat to meet those goals, to the point where it became widespread. Thousands were fired for this type of conduct.

One person who has not been fired is the executive who ran Wells’ consumer banking division, Carrie Tolstedt. She announced earlier this year that she would retire from Wells at the end of 2016. Despite running this troubled division, she is expected to walk away with roughly $125 million in compensation.

Wells Fargo has refused to say if it is considering implementing its executive compensation clawback provisions regarding Tolstedt. The bank adopted a somewhat aggressive clawback provision in 2013 that would apply to Tolstedt as a highly paid executive.