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California wants to suspend or take away Wells Fargo's insurance license over sales

Key Points
  • California is scrutinizing renter's and term life insurance policies sold from 2008 to 2016 through a Wells Fargo referral program.
  • The bank has been trying to bounce back from a fake accounts scandal affecting 3.5 million customers.
Customers wait in line for an ATM outside of a Wells Fargo bank branch in Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images

California's insurance regulator wants to suspend or take away Wells Fargo's insurance license for sales practices related to the bank's online referral program that it says were improper.

About 1,500 unauthorized policies were opened on behalf of customers, many without their knowing, through the program, according to California, which filed the accusation against Wells Fargo last week.

The sales concerned renter's insurance policies and term life policies offered by four different insurers through a referral program Wells offered in its branches.

In a statement on Wednesday, Wells Fargo said, "As we previously announced, Wells Fargo suspended online referrals of renters and simplified term life insurance products in December 2016 and initiated an internal review of those products. We have been cooperating with the CA Department of Insurance (DOI) over the course of this year."

Last month, Wells said it would get out of the property and casualty personal insurance business but said the move was unrelated to the insurance department's investigation.

The bank has been trying to recover from a much broader fake accounts scandal that prompted a top management upheaval last year. Wells, based in San Francisco, paid $185 million in fines to federal regulators and the city of Los Angeles over the fake accounts problem uncovered last year that affected 3.5 million customers.

Bank employees, under pressure to meet aggressive sales targets, were opening unwanted deposit or credit card accounts in customers' names or enrolling them in services they didn't request. The scrutiny has since spread to mortgage and auto lending businesses at the bank.

The insurance sales through the referral program were mentioned in a footnote to a report about the bigger fake accounts scandal released by Wells' board of directors in April.

California's insurance regulator said in the accusations filed with the department last week that the unauthorized sales occurred between 2008 and 2016.

Wells said in its statement on Wednesday, "We are sorry for any harm this caused our customers and we are making things right for them as part of an ongoing remediation."

Shares of Wells Fargo were little changed on Wednesday.

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