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US Bank Wells Fargo fined $185 million for toxic-sales culture

22 September 2016

Customers at USA Bank Wells Fargo had accounts opened for them, money transferred and credit cards issued in their names, without their knowledge or consent, often racking up fees or other charges. In fact, around 565,000 credit cards were issued without consumers’ agreement, amassing annual fees and interest and damaging consumers’ credit reports.

US bank Wells Fargo created 556,000 credit cards without consumer consent


The Consumer Financial Protection Bureau (CPFB) found that these illegal practices were driven by the toxic-sales culture at the bank where frontline staff and managers were given high bonuses for meeting sales targets. They had their sales levels monitored daily or hourly and were humiliated or threatened with the sack for failing to hit sales goals.

As a result of these practices the bank has been fined a total of $185 million.

Once again this highlights the way that inappropriate sales incentive schemes can lead to practices which have detrimental impacts on consumer protection - an international issue that Consumers International highlighted in our report Risky Business: the case for reform of sales incentives schemes in banks.

Consumers International is campaigning for increased consumer protection in the financial sector. We want inappropriate sales incentive schemes banned as well as accountability of senior executives for these practices and for those at the top to be subject to enforcement action and clawback of their substantial bonus payments.

This has not been the case at Bank Wells Fargo, where despite firing 5,300 of their staff over five years for fraudulently opening accounts, senior executives maintain that they didn’t know what was going on and weren’t aware of the scale of the toxic sales-based culture which the sales incentive schemes had created.

The Wells Fargo case also highlights that more needs to be done to implement Consumers International’s recommendation to ensure proper whistle-blowing arrangements, enabling frontline staff concerned about the pressure to sell to be able to raise concerns with senior executives at the bank and with regulators. The whistle-blowing arrangements appear not to have worked at Wells Fargo and there are reports that staff who called the Wells-Fargo “ethics line” to report issues were fired.

New rules and guidance on sales incentive schemes

Across the world, regulators are introducing new rules and guidance for sales incentive schemes. The European Banking Authority and FinCoNet - an international organisation of supervisory authorities which have responsibility for financial consumer protection – are consulting on new rules. These new rules and action taken by regulators like the CPFB are welcome but more needs to be done to change bank culture by reforming sales incentive schemes for frontline staff.

Work by Consumers International has demonstrated that inappropriate sales incentive schemes are an unacceptable risk to consumer protection, financial stability and have been an important cause of worldwide bank misconduct, contributing to the following scandals:

  • Mis-selling of Payment Protection Insurance by many of the UK’s largest banks, leading to payments of £38.6 billion so far in compensation payments from banks.
  • Mis-selling of risky investment products in Australia has caused losses of AUS $5.7 billion to consumers and more than AUS $300 million so far in compensation payments from banks.
  • Mis-selling of ‘hybrid securities’ to retail consumers by Spanish banks, causing instability in the Spanish banking system, government bail-outs of a number of banks, significant losses to consumers and the payment of €2.9 billion so far in compensation.
  • Mis-selling of structured investment products backed by Lehman Brothers through a number of retail banks in Hong Kong leading to losses to consumers of around HK $2.2 billion and compensation payments from the banks of around HK $3.4 billion.
  • Mis-selling of insurance and investment products by DSB Bank in the Netherlands, leading to its eventual collapse and the payment of €215 million in compensation to consumers.

Our work called for: 

  1. The G20 to request an urgent review of capital requirements for operational risk to include substantial increases to address risks and costs associated with inappropriate sales incentives schemes and the problems they cause including mis-selling.
  2. We want to see accountability from the senior executives in the banks themselves.
  3. Reform also needs to tackle the pressure staff face to meet sales targets, such as threats of disciplinary action, performance management or dismissal.