Wells Fargo executives knew that the car insurance program was incorrect: litigation

WASHINGTON (Reuters) – Wells Fargo & Co executives were warned that a car insurance plan could overload customers four years before the bank deleted the program, according to a complaint issued by a referee this week.

Several executives, including General Attorney James Strother and Chief Auditor David Julian, among the bank's officials, was informed in 2012 of potential errors in the car insurance program that ended in 2016, according to parts of a lawsuit that was revealed on Monday.

A Wells Fargo official refused to comment on the allegations in the lawsuit but said that the bank intended to repay all customers who were injured.

"We have reviewed customer accounts and developed a plan of redevelopment – as we hope to finish soon," said spokeswoman Natalie Brown.

Strother, Julian and other leaders called in the lawsuit could not be reached immediately for comments. Last month, the authorities warned Julian and another bank officer that they could face sanctions for their former work with Wells Fargo.

Wells Fargo completed its car insurance program in September 2016 after an internal assessment found many customers incorrectly placed in an expensive product they did not need.

The bank had the right to force car borrowers into the product called "security protection" (KPI) if they left their own policies. But in the end, the bank said 600,000 customers were forced to CPI unnecessary when it reached a government bill of 1 billion dollars in April.

Wells Fargo's originally estimated cleaning efforts would cost $ 64 million, but that figure has since swelled as it was determined that more borrowers owe larger amounts. In the third quarter, Wells Fargo put $ 241 million for the affected customers.

Misuse of car insurance is part of a wider scandal over Wells Fargo's customer treatment. The bank revealed over two years ago that it opened millions of fake accounts in the customer's name without their permission to beat sales targets.

The San Francisco-based lender has since found sales fraud in businesses ranging from mortgages to property management.

The case was originally filed in U.S. District Court, Central District of California, in August. Wells Fargo has fought to keep some details about the matter under sail.

Plaintiffs say they are customers seeking reimbursement of unfair costs, claiming that Wells Fargo pushed drivers with bad credit to politics more often than wealthy customers.

Wells Fargo was 10 times more likely to force borrowers with bad credit to CPI insurance than those with high credit points, according to the lawsuit, citing an internal bank presentation.

Drivers of Tesla vehicles and others who had high loan balances were excluded from the CPI, according to the lawsuit.