About the inquiry, people said, Wells Fargo, the bank suffering from the scam, is facing a new regulatory inquiry to refund the insurance money for those who had started their car loan.
Just last month, Wells Fargo was forced to insure unnecessary collision insurance on those consumers who financed their car purchase. This practice, first revealed by The New York Times, influenced 800,000 customers according to an analysis incorporated by the bank. As a result, 274,000 people were blamed, and 25,000 cars were renamed incorrectly.
Latest investigations by officials of the Federal Reserve Bank of San Francisco, where the headquarters of the bank consists of a separate, special type of insurance that sell to consumers when they buy a car, guaranteed auto protection insurance, or GAP is called , Its purpose is to defend against a lender against the fact that a car – collateral for its debt – loses significant value B he goes too far
GAP insurance, also known as guaranteed asset protection, makes that difference for a lender if, for example, a car is stolen before payment of a loan, regular car insurance usually only Covering the current market price.
Due to Wells Fargo is a big auto lender, due to thousands of Clients may be effected by the banks work on space insurances.
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Car buyers are not mandatory to take GAP insurance, which usually spend from $ 400 to $ 600. But car dealers push insurance, and it provides because of the kind of lenders who provide security. When the borrower quickly pays the loan, they are entitled to a return on some GAP insurance premiums as those who pay for the payment will no longer be necessary.
In nine states, laws require that customers get unused insurance money back. They are Alabama, Colorado, Indiana, Iowa, Maryland, Massachusetts, Oklahoma, Oregon and South Carolina.
Wells Fargo spokesman Jennifer A. The temple gave a statement: “During the internal review, we search for issues related to the lack of inspection and control of the surrounding property protection products. We are reviewing our behavior and active with our dealers. And we have already started improving the GAP refund process. If we search for customers’ impacts, S will be done. ”
The Ms temple refused to say when the problem occurred. He said that how many customers was trying to assess the effect of the impact on the customers. Better control over the return process in Wells Fargo 2014, he said. The unit of the car loan making company is called Wells Fargo Dealer Services
When asked about regulatory investigations of GAP insurance in Wells Fargo, a spokesman for the Federal Reserve Board in Washington, Darren Gersh said, “We are focusing on ensuring that the firm’s compliance and the root causes of the breakdown of control Understanding and addressing. ” Refused to comment on the specifications, and said that “the Federal Reserve Board will take any regulatory and supervision steps which we feel are necessary to ensure the firm’s attention for compliance.”
The unemployed borrowers were unable to withdraw the insurance money, whose cars were re-owned in their arrears, this is a figure which the bank reports to the consumer credit bureaus. All 50 states require that the amount of unused insurance be deposited in the accounts of those borrowers, which reduces the outstanding amount.
Wells Fargo indicated in filing a new problem in its quarterly financial statement issued on Friday, the bank said in the filing, “The company has fixed issues of certain issues related to insurance contracts and assignments, unused part of the lender, between the fixed auto-protected rebates or the dealer. Identified, which refunds to customers in some states “.
“Those who have other issues relevant to the collection of origins, servicing and / or indirect clients auto loans, inclusively related insurance products, can include the company conventional or informal investigation, examination or examinations from the federal, state and / or local government agencies, And can also loot the company. ”
GAP coverage is similar to home mortgage insurance, which implies lenders against a default if a borrower loses his job and can not pay
Car buyers who make their purchases generally add the cost of GAP coverage to the amount of credit. The borrower who pays on coverage goes to the interest bank who made the loan.
“Dealer Services is on a journey to help strengthen their business, fix problems and make better Wells Fargo,” said Ms. Temple. “We have taken major active steps to improve customer experience.”
The new problem raises questions about Wells Fargo’s internal control and inspection of the board of operations of the company.
In a separate crisis on Wells Fargo was revealed last year, bank employees have created millions of credit cards and bank accounts which customers did not request. From this, millions of dollars in penalties and the departure of Chief Executive Officer John G Stumpf
Recently, after disclosing that the bank had forced auto insurance on those customers who were not needed, many Democratic MPs told them that the hearing should be convened to know more.
In a Senate banking committee, a Massachusetts Democrat senator Elizabeth Warren also requested that the Fed, after being out of 15 directors of 12 Wells Fargo, said that he had violated his duties for monitoring the risk management at the bank at the time when it was unlikely place.
In his regulatory filing on Friday, Wells said that its directors have taken action to increase administration and inspection.
“The Board has acknowledged that work is still to be done, and in response to the response received in our annual shareholders meeting in April 2017, the board is engaged in a continuous comprehensive review of its structure, structure and practices,” he said. The bank expects that the results of the review are expected to come in the coming months.
In a statement of employees who had filed on Friday, Timothy J. Sloan, Head of Wells Fargo said, “To retain the trust we have lost, we must remain transparent with all our stakeholders and We should proceed with what we have been asked. By reviewing all of our operations, our regulators did not leave – so we can be confident that we have a better Is done to strengthen Wells Fargo, he did. ”
Source: Best Health Insurance UK