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Fraudulent bank accounts, bogus credit cards, compromised customer data and, now, unwanted car insurance.

Wells Fargo & Co., it seems, just can’t stay out of trouble.

News late last week that the lender may have charged more than 500,000 people for auto insurance they didn’t need has raised uncomfortable questions for the bank, including the big one: What will it take to clean up Wells Fargo?

After nearly a year of scandal and upset, including the ouster last year of Wells Fargo’s long time Chief Executive Officer John Stumpf, this week’s development showed that even as the bank was publicly vowing to address one scandal, over bogus accounts, it was working quietly to defuse another, over auto insurance. Earlier this month, Wells Fargo said it mistakenly gave reams of sensitive data about wealthy clients to lawyers for a former employee.

At its Investor Day in May, when Wells Fargo executives spoke for hours about changes they made since the retail bank accounts scandal, they didn’t tell investors about the auto insurance problem that had come to light internally in July 2016. Franklin Codel, one of those executives, said he didn’t think the issue should have been disclosed at the time.

“We knew there was going to be a day where we were talking about this in the public domain,” Codel, head of consumer lending, said Friday in a phone interview. “We wanted to be as prepared as we could.”

‘Our Regret’

Codel, who reports to new CEO Tim Sloan, said disclosing the auto insurance findings several months ago would have made dealing with customers’ complaints more difficult, since they were still working on a remedy.

“When we go public, customers start calling, wanting to know, ‘Hey, I had that, where is my money?'” he said. “It’s hard to say to them, ‘Well, we’ll get to you in four months.'”

An internal review of the San Francisco-based bank’s auto lending found more than 500,000 clients may have been improperly charged for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies, Wells Fargo said in a statement late Thursday. The firm, the largest U.S. auto lender, said it may pay as much as $80 million to affected clients — with extra money for as many as 20,000 who lost cars, “as an expression of our regret.”

Kevin J. Barker, a Piper Jaffray & Co. analyst, said lawsuits could cost the bank “multiples more” than what it’s planning to pay customers, while further harming already strained relationships with some clients.

“Why didn’t the company address these issues publicly while they were already dealing with the account scandal?” Barker wrote Friday in a note to investors. “What other collateral damage may have been caused by the repossession of these cars on peoples’ lives?”

Remediation Plan

Wells Fargo told the Office of the Comptroller of the Currency and two other regulators about the problem “very promptly” after receiving customer complaints in July 2016, Codel said. Wells Fargo shut down the program in September and was in “regular conversations” with regulators while it worked on a remediation plan, he said. Dawn Martin Harp, who ran the auto financing unit, announced in January that she was leaving after more than 20 years at the bank.

Bryan Hubbard, an OCC spokesman, said the agency can’t comment “on ongoing supervisory matters” at a bank it regulates or “potential pending actions.

Wells Fargo didn’t disclose the auto insurance issue in regulatory filings or financial statements because the lender didn’t consider it material, according to a person with knowledge of the matter, who asked not to be identified discussing company deliberations. The firm reached a similar conclusion when it came to reporting the opening of fake customer accounts.

The accounts scandal erupted publicly in September after Wells Fargo paid $185 million in fines to regulators. The lender initially blamed low-level staff for the infractions and fired more than 5,300 employees over five years to curtail the practice. That backfired as workers came forward to say they faced intense pressure to meet unrealistic quotas. It’s ended up costing the bank at least $520 million in fines, remediation, consultants and civil litigation.

Not Material

The drip, drip, drip of revelations about various scandals goes beyond how much in fines or customer reimbursements the bank must pay to larger questions of credibility, Ed Mills, an FBR Capital Markets analyst, said in an interview.

“What we have seen repeatedly with Wells Fargo is that the economic impact is not material and it’s more of the reputation that’s impacted,” Mills said. “What is big to the average American, and what is big to Wells Fargo, are two very different things.”

The latest scandal is raising questions about whether the problem lies in Wells Fargo’s culture and its internal controls. The OCC, its main regulator, came down hard on the bank in September, blaming the sales culture for encouraging unauthorized accounts. Even the firm’s own board found in a report this year that executives’ enthusiasm for cross-selling products turned into a fixation that infected lower-level employees.

Codel said Friday the way the bank handled the auto insurance issue exemplifies “the right culture.”

Outside Firm

“When I think about the culture I like to see at Wells Fargo, it is one where we listen to our customers and our team members,” he said. “If there is an issue, we find it, we acknowledge it, we fix it and we take steps to make it right for our customers.”

The bank’s review of the insurance sales program found that another firm — insurer National General Holdings Corp. — failed to ensure that customers weren’t charged for coverage if they already had their own policies, Wells Fargo said in Thursday’s statement. As with homeowners’ insurance, banks are often required to ensure the assets they lend against, vehicles in this case, are protected against losses.

National General “feels confident with its compliance in this highly regulated industry,” Christine Worley, director of investor relations at New York-based National General, said Friday in an email. The insurer has “always refunded premiums directly to our financial institution customers in a timely manner and provided all necessary notifications in compliance with law and industry practice,” she said.

Related:

• Wells Fargo Overhauls Pay Plan for Branch Employees Following Scandal
• Wells Fargo Banks on Arbitration to Settle Fake Account Claims
• USI Wins Competition to Acquire Wells Fargo 热点黑料 Businesses

Topics Auto