Wells Fargo agreed to pay $1 billion in penalty to settle its regulatory violations related to its auto loans and mortgage businesses.
The U.S. Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) announced the settlement on Friday.
The regulators found that Wells Fargo violated Consumer Financial Protection Act (CFPA) for abusing customers. The bank did not tell certain customers that it is charging insurance fees tied to auto loans and rate-lock extension fees tied to residential-mortgage loans.
In its consent order, the CFPB stated that Wells Fargo “inappropriately” charged customers extra fees on interest rate-lock extensions even if the bank caused the delays. The regulator noted that the bank’s internal audit “determined that its Extension Fees policy was not consistently applied.”
Under the settlement agreement, Wells Fargo will reimburse customers affected by its wrongdoing. The bank will also implement measures to improve its risk management and compliance management.
Amount of the settlement reflects the severity of Wells Fargo’s violations
In a statement, CFPB Acting Director Mick Mulvaney said, “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
