Trust is the missing ingredient in the relationship between Wells Fargo and its customers.
Here we go again. I thought things couldn’t get much worse for the Wells Fargo brand after the public learned that a group of “rogue employees” had opened as many as 3.5 million phony accounts in order to meet the mega-bank’s ever-increasing demand for more business. But things there were much darker than I could have imagined.
It turns out that the bank has been cheating their customers in other ways as well. According to published reports, the bank forced some 800,000 customers who financed their car purchases to buy collision insurance they didn’t need. As a result, 274,000 of those borrowers were forced into delinquency and 25,000 cars were wrongly repossessed. Wells Fargo may have pocketed $73 million of money on the deal but it’s going to cost them a lot more than that in restitution and penalties.
The bad news doesn’t end there. The Federal Reserve Bank of San Francisco is going after Wells Fargo for failing to make refunds on guaranteed auto protection insurance to people who paid off their car loans early. The effects are still being calculated, but there could be tens of thousands of customers who were ripped off here.
Lastly, there’s the investigation by the Consumer Financial Protection Bureau into the potential damage Wells Fargo caused customers by either freezing or closing accounts suspected of being affected by fraudulent activity.
Is it any wonder Wells Fargo is the least trusted company in the banking industry? In an annual survey benchmarking the level of trust that consumers have with major companies, 11 of the 12 least trusted companies were TV/internet service providers or health plans. And Wells Fargo. In a companion survey gauging how likely consumers are to forgive companies after they make a mistake, Wells Fargo had the biggest decline of any bank. Not surprisingly, Wells Fargo didn’t make Fortune’s list of the world’s most admired companies.
When he took over as the embattled mega-bank’s CEO last October, Tim Sloan listed “rebuilding trust” as his highest priority for the firm. He’s obviously still got a lot of work to do, but so does the banking industry as a whole. In the annual Gallup Poll on Honesty/Ethics in Professions, 30% of respondents indicated they don’t have a very high opinion of bankers’ ethical standards. Actually, other than healthcare workers, Americans don’t really have a lot of respect for the ethics of most professions, especially members of Congress, the only group for which a majority of Americans (59%) rate honesty and ethical standards as low or very low.
Wells Fargo CEO Sloan’s message to employees after the insurance scandal broke: “To regain the trust we have lost, we must continue to be transparent with all our stakeholders and go beyond what has been asked of us by our regulators by reviewing all of our operations—leaving no stone unturned—so we can be confident we have done all that we can do to build a better, stronger Wells Fargo.”
Those are the right words, now it’s up to Sloan and everyone else at Wells Fargo to live up to them. The whole Wells Fargo fiasco should also serve as a cautionary tale for the rest of the banking and financial services industry. And really for any business, because you can never go wrong by doing the right thing in the first place.