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Wells Fargo to refund US$80m to customers hit by car loan insurance
[BENGALURU] Wells Fargo and Co said it would reimburse about US$80 million to 570,000 customers who may have been charged wrongly due to issues related to auto collateral protection insurance (CPI) policies.
Wells Fargo has been engulfed in scandal since September, when it reached a US$190 million settlement with regulators over complaints that its retail banking staff had opened as many as 2.1 million unauthorized client accounts.
The bank had fired 5,300 employees for improper sales tactics over five years, but did not make much changes to policies and procedures, or hold managers accountable until there was a public outcry.
Wells Fargo said late Thursday it would pay back US$80 million to customers wrongly charged for car loan insurance in the coming months, which included US$64 million in cash and US$16 million of account adjustments.
"We take full responsibility for our failure to appropriately manage the CPI programme and are extremely sorry for any harm this caused our customers," said Franklin Codel, head of Wells Fargo Consumer Lending.
The bank said it had started a review of the CPI program in July 2016 and discontinued the program in September, based on the findings.
New York Times reported earlier that more than 800,000 people who took car loans from Wells Fargo were charged for auto insurance they did not need, and some of the customers were still paying for it.
About 490,000 customers had duplicate vehicle insurance coverage and about 60,000 customers did not receive complete disclosures from vendors, prior to CPI coverage, Wells Fargo said.
For about 20,000 customers, additional costs of the CPI could have led to defaults resulting in seizure of their vehicles. The bank said these customers would receive additional payments as compensation for the loss of their vehicles.