Wells Fargo reaches $857 million settlement for consumer abuses

Wells Fargo acknowledged opening more than 3 million sham accounts customers didn't want. Photo / AP

Wells Fargo on Friday reached a US$575 million ($857.4m) settlement with all 50 states and the District of Columbia to resolve allegations it had engaged in various abuses of its customers, including opening millions of sham accounts they did not want.

The bank also improperly charged some customers mortgage fees and enrolled others into an auto insurance program they didn't need, resulting in thousands of cars being repossessed, according to the settlement.

Under the deal, the San Francisco bank must refund customers, though it does not specify how much.

"This significant dollar amount, on top of actions by federal regulators, holds Wells Fargo accountable for its practices." Iowa Attorney General Tom Miller said in a statement.

The settlement ends wide-ranging investigations that began in 2016 when Wells Fargo acknowledged firing 5,000 employees for opening sham accounts customers didn't want in order to meet the bank's aggressive sales goals and qualify for bonuses.

"This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank," Tim Sloan, Wells Fargo's chief executive, said in a statement.

Wells Fargo is grappling with containing a wave of scandals over the last year. In February, the Federal Reserve levied an unprecedented penalty against the bank, blocking its ability to grow larger, and the bank paid an US$1 billion settlement to other federal regulators in April.

Wells Fargo's legal and public relation's problems are likely far from over. Democrats are expected to grill company executives when they take control of the House next year.

Wells Fargo also recently acknowledged that it had improperly failed to help hundreds of distressed homeowners after the financial crisis, forcing more than 500 into foreclosure.