In the wake of the recent controversy surrounding sales practices at Wells Fargo, the Office of the Comptroller of the Currency has conducted an internal review of its own oversight practices. Results of the review were released on Wednesday.
Titled the “Lessons Learned Review of Supervision of Sales Practices at Wells Fargo,” the report includes weaknesses identified in the OCC’s handling and supervision of Wells Fargo during recent legal issues. Those issues stemmed from allegations that the bank open accounts in customers’ names without their consent.
“Wells Fargo’s improper sales practices, including the opening and manipulation of customer accounts without the customer’s authorization, are completely unacceptable and have no place in the banking system,” the report stated. “The actions of WF highlight that the OCC must continue our efforts to improve and refine the agency’s supervisory program, to sharpen our early warning processes, and to enhance our supervisory capabilities.”
One of the main issues identified in the OCC’s report was the agency’s failure to respond in a timely manner to deficiencies which, in Wells Fargo’s case, the OCC was aware of for years.
“The issues with sales practices were identified in the bank’s audit committee reports as early as 2005 and in OCC core assessment conclusions since at least 2010,” according to the report.”
The review also found the OCC’s supervision of complaints, whistleblower cases, and Wells Fargo’s incentive sales program was ineffective and that communication and follow-up was lagging. Unclear supervisory records—included a lack of documented analysis—also posed a problem.
“Wells Fargo supervision since 2010 provides meaningful lessons learned about the importance of comprehensive LBS complaint and whistleblower analysis and follow-up; effective supervision of controls around high-risk incentives; quality MRA communication and follow-up; clear supervisory records; supervision of reputation risk; and any enterprise-wide whistleblower processes,” the report concluded.
According to Bryan Hubbard, Deputy Comptroller of Public Affairs at the OCC, the agency is in the process of addressing each weakness addressed in the report.
The review was announced back in September by Comptroller of the Currency Thomas J. Curry when he went before the Senate’s Committee on Banking, Housing, and Urban Affairs.
“I believe the OCC can and must do better,” Curry said. “To that end, I have asked my Senior Deputy Comptroller for Enterprise Governance to conduct a post mortem to identify potential gaps in our supervision.”