Wells Fargo CEO John Strumpf was named “2013 Banker of the Year” by American Banker Magazine. That same year, Carrie Tolstedt, head of Wells Fargo’s consumer banking division “The Community Bank”, was named “Most Powerful Woman in Banking”. In 2015, Strumpf beat Amazon’s Jeff Bezos to be named “CEO of the Year” by Morningstar Inc., and shortly after, in 2016, the company reported grossing over $90 billion in revenue. Wells Fargo had positioned itself at the top of the financial world and seemed poised to stay there. Less than a year later, allegations of widespread fraud and customer abuse knocked them from their seat at the top.
An aggressive sales initiative within “The Community Bank” at Wells Fargo led to strict daily sales quotas, leaving managers and employees fighting to hit their sales goals. Ultimately, accusations of fraud and customer abuse stemmed from allegations that employees had created accounts for existing customers without their permission. While many would look towards Wells Fargo’s compliance programs for answers, FRA’s Matt Bedan argues that it is just as important to look at the company’s culture. For example, in 2015, Wells Fargo had over 10,000 employees dedicated to organizational risk with plans to add even more. The company had extensive compliance infrastructure, confidential reporting lines, and senior level oversight. Lack of compliance resources could not be the source of blame for this scandal.
In this first article of a three-part series for The Anti-Corruption Report, FRA Manager Matt Bedan takes a close look at the culture within Wells Fargo. He discusses the aggressive sales initiative and the high-pressure environment that opened the door for fraudulent acts. The second article in the series will examine the incident through the lens of behavioral science with the final article providing practical advice for companies to incorporate lessons learned into their own compliance programs.
Read the first article in the latest The Anti-Corruption Report.