Wells Fargo ordered to pay $3.7 billion fine for consumer loan violations, largest ever penalty against a bank

American financial behemoth Wells Fargo has decided to pay $3.7 billion to settle loan violations, making it the largest fine to be levelled against a bank.

The bank has been accused of harming consumers by charging illegal fees and interest on auto loans and mortgages, and incorrectly applying overdraft fees against savings and checking accounts.

On Tuesday, the Consumer Financial Protection Bureau (CFPB) ordered Wells to repay $2 billion to consumers and enacted a $1.7 billion penalty against the bank.

The bureau blamed the bank’s bad behaviour that impacted more than 16 million customers.

“Put simply: Wells Fargo is a corporate recidivist that puts one out of three Americans at risk for potential harm,” said CFPB Director Rohit Chopra, in a call with reporters.

He said that the bank’s behaviour prompted the regulators to take additional actions against Wells Fargo that go beyond the $3.7 billion in fines and penalties.

In a statement, Wells Fargo CEO Charles Scharf said that the agreement with the CFPB is part of an effort to “transform operating practices at Wells Fargo and to put these issues behind us.”

“Our top priority is to continue to build a risk and control infrastructure that reflects the size and complexity of Wells Fargo and run the company in a more controlled, disciplined way,” Scharf said,

Wells Fargo has been repeatedly sanctioned by US regulators for breaching the consumer protection laws going back to 2016, when employees opened millions of accounts illegally in order to meet unrealistic sales goals.

Despite the warnings, the bank only intensified its malpractices after it was found to be in violation of other parts of consumer protection law, including in its auto and mortgage lending businesses.

In 2018, Wells Fargo coughed up $1 billion penalty for widespread consumer law violations, the largest against a bank for such violations at the time.

(With inputs from agencies)