Wells Fargo was fined $185 million in 2016 for opening millions of potentially fake accounts, prompting the Office of the Comptroller of the Currency (OCC) to perform a months-long industry-wide review. However, the U.S. regulator has concluded that the practice of creating fake customer accounts isn’t a sign of a broader issue for the financial industry.
According to Bloomberg, aside from Wells Fargo, the OCC found incidents of fake accounts at other banks, according to spokesman Bryan Hubbard. Yet, the regulator “did not identify systemic issues with bank employees opening accounts without the customer’s consent.”
However, just one day earlier, it was reported that,after reviewing sales practices at more than 40 large and mid-sized banks, the OCC found multiple systemic issues — along with hundreds of problems at individual banks. This included banks opening accounts without proof that consumers gave them permission to do so.
The review also caused warnings to go out on five industry-wide problems, along with 250 items that regulators wanted specific financial institutions (FIs) to correct. Though the results have not been publicly released, Dan Ryan, who leads the banking practice PwC, was briefed on the results.
“This has hit home for the C-suite and the boards of the major banks,” Ryan said. “No one buried their head in the sand.”
Following the review, many banks undertook “timely actions” to remedy weaknesses in their institutions.
Hubbard said, “As a result, systems and controls in these banks are now better-integrated and more apt to identify inappropriate sales activities in a timely manner.”
In May, Wells Fargo announced that it agreed to pay $480 million to settle a securities fraud class-action suit. The fine is subject to a final approval by the court. Though Wells Fargo had denied the claims and allegations in the action, the FI said it entered into the settlement to avoid the costs and disruption of further lawsuits.