Wells Fargo auto insurance product scandal will now lead to $130 million in payments
The financial giant released a securities filing at the end of last week with its updated estimates.
The Wells Fargo auto insurance product scandal has received a fresh update as the bank updated its payment estimates in a recent securities filing. The document revealed the financial giant’s intentions to pay a total estimated $130 million to affected customers.
That new figure represents an amount that is $50 million greater than previous estimates it released.
The auto insurance product in question has since been discontinued. The premiums associated with its coverage led to a massive scandal for Wells Fargo, which has only led to a growing number of similar problems for the bank.
Wells Fargo specified that about $100 million of the total represented cash remediation. The remaining $30 million will be used for account adjustments within its strategy to make up for the actions of the company within the scandal. This figure was considerably higher than its original estimates back in July. At that time, it predicted $64 million in cash remediation on top of $16 million in account adjustments.
The problems with the auto insurance product landed on top of the sales practices scandal from 2016.
In September 2016, Well’s community bank was found to have been using unethical sales practices, which led to congressional hearings, a $185 million settlement and a replacement of the bank’s former CEO.
In July 2017, the bank confessed to having charged unnecessary auto insurance premiums to up to 570,000 of its customers. These additional costs led to thousands upon thousands of vehicle repossessions and damage to customer credit scores.
The bank began issuing refund checks to customers whose policies had been issued between January 1, 2012 and September 30, 2016, at which time the practice was discontinued, according to last Friday’s security filing. That said, the filing also pointed out that Wells Fargo has since extended the length of time in which customers could be deemed eligible for remediation. The time period will now include the policies sold as early as October 15, 2005.
“This is an ongoing remediation, and it may continue to evolve as we work to make things right for our customers, including working with our regulators on our remediation plan,” said Catherine Pulley, a spokesperson for Wells Fargo who addressed the auto insurance product scandal.