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EXCLUSIVE-Wells Fargo planned to disclose auto insurance issues during customer refunds -exec

customer refunds -exec@ (Adds details on broader sales scandal and investor comment.)

NEW YORK, July 28 (Reuters) - Wells Fargo & Co began examining the way its auto lending unit enrolled borrowers into insurance policies a year ago, but did not plan to disclose problems it uncovered until it was ready to issue reimbursements to affected customers, its head of consumer lending told Reuters on Friday.

In an interview, Franklin Codel said the business started noticing elevated customer complaint volumes in July 2016. It quickly suspended its auto collateral protection insurance (CPI) program and escalated issues to senior management, the board and regulators, he said.

"The problem with disclosing to the marketplace today or several months ago is customers start calling and asking when they're going to get their money," he said.

Wells, the third-largest U.S. bank, has been embroiled in a scandal since last September over sales abuses across its branches that affected as many as 2.1 million customers, and faced questions over whether its disclosures were timely or adequate.

It began publicly addressing problems with insurance sales in the auto lending business, which affected more than 800,000 customers, in response to a report in The New York Times on Thursday.

In a statement on Friday, New York City Comptroller Scott Stringer, who controls funds that hold Wells Fargo stock, demanded better disclosures about the auto insurance problems and called for a new independent chairman of the board.

The board "needs to be overhauled - now," Stringer said. (Reporting by Dan Freed in New York; Writing by Lauren Tara LaCapra; Editing by Bernard Orr)