Apparently, the latest development on the Wells Fargo controversy takes interesting new twists.
Last Tuesday (9/20/16), John Stumpf, CEO of Wells Fargo, spoke to the Senate Banking Committee to apologize for the bank’s opening as many as 2 million bogus customer accounts to generate fees for the lender. “I accept full responsibility for all unethical sales practices,” CEO John Stumpf told a congressional panel. Another ripple effect of Wells Fargo’s scandal includes John’s resignation from a national panel that discusses financial matters with the Federal Reserve. These are perfect examples of what an organization can face by simply failing to apply strong policy controls and business processes. Poor risk evaluation to describe potential business impact can also lead to such unfortunate outcomes. See below for articles’ links.
http://www.huffingtonpost.com/entry/wells-fargo-hearing_us_57e02afee4b0071a6e08b170?
There are some real flaws with Wells Fargo corporate culture and values. Their CEO John Stumpf created a culture where employees were obligated and pressured cross sale new accounts to existing customers, even if they don’t need. This in turns increase the stock price of the company. The average accounts held by other banks are 3 per customers. CEO John Stumpf set the target for the company at EIGHT! With this sort of unrealistic goals it created a culture that cut corners to meet those goals.
Aside from the corporate culture, we have to consider their governance policies regarding their segregation of duties, and workflow management. Five thousand three hundred employees were fired. It is a wide net for any organization. The problem is it’s only consist of lower management and employees. You would think that somebody at the top oversees the banks processes for opening new accounts. Come on now, it happened for FIVE years.
You are totally right Loi. The culture at Wells Fargo has really created an environment where salespeople are pressured into opening these fake accounts. I read many articles where former workers felt they were getting fired if they didn’t meet the quota, and how they were stressed out all the time. It was easy for this crook to target 8′ accounts per customer, since he wasn’t the one that actually had to go and open them.