Wells Fargo reviewing sales practices

Wells Fargo's CEO Tim Sloan said on Thursday a comprehensive review of the bank's sales practices would be done ‘relatively quickly' and unveiled a series of immediate changes at the bank's retail unit under new division boss Mary Mack.

Management is reaching out to employees who were wrongly fired, while continuing to review sales practices across the bank, and changing compensation plans to avoid incentivizing bad behavior. It is also ramping up marketing efforts after having slowed them in the wake of the problems, Mack told an industry conference in Boston, her first with analysts since taking over the retail business.

Wells Fargo's period of atonement follows a $185 million settlement on Sept. 8 with federal regulators and a Los Angeles prosecutor regarding its opening as many as 2 million accounts in retail customers' names without their permission.

The bank, which earlier said in a regulatory filing that legal costs could exceed reserves by $1.7 billion, also has hired an outside consultant to guide changes to the retail business.

The retail unit's new risk chief reports into the broader company's risk chief, rather than to Mack. The bank also said it created a new ‘Change Leader' position in the unit to focus on ‘what great customer experience looks like,' according to Mack and Sloan's presentation.

'We're going to leave no stone unturned,” said Sloan.

'I don't want there to be a question about how we interact with customers at Wells Fargo,” he added. 'We're going to put that to rest. That's going to be done in a very comprehensive way and it's going to be done relatively quickly, but it's going to be done right.”

An independent consultant is reviewing sales practices across the whole bank, Sloan said, without identifying the company.

In addition to the settlement with federal regulators, Wells Fargo also faces probes from several other regulators and authorities, including the U.S. Department of Justice and congressional committees. The Securities and Exchange Commission also is examining the bank, Wells said in its filing.

Wells Fargo's $1.7 billion estimate of its potential legal expense shortfall is up from a $1 billion estimate in August.