WASHINGTON (Reuters) - Wells Fargo & Co will not finish paying back the estimated 600,000 customers it wrongly charged for auto insurance until at least 2020, the bank said in a letter to U.S. lawmakers seen by Reuters.
U.S. regulators slapped Wells Fargo with a $1 billion penalty in April when it admitted to wrongly forcing drivers into auto insurance policies. That agreement envisioned the customer payouts would finish within months.
“We will be contacting customers and providing them with compensation in multiple stages throughout 2019, with the final stage scheduled for January 2020,” the bank said in a letter dated Oct. 9 to the Senate Banking Committee’s top Republican and Democrat.
As Wells Fargo tries to complete a drawn-out remediation, bank executives are also trying to convince the Federal Reserve to lift a cap on growth put in place due to a string of past sales practice abuses. Bank executives have said they expect the Fed to lift that asset cap by the first part of 2019.
And while the bank disclosed the auto insurance issue in July 2017, the amount it expects to pay back customers has grown.
In August, Wells Fargo said that it expected to pay back drivers $212 million. The bank had originally estimated it would pay out $64 million in cash remediation when it disclosed the problems.
Drivers who bought a car through Wells Fargo and let their insurance lapse could be charged for “force-place” policies. The bank enrolled about 2 million drivers into such policies and more than a quarter of those were not needed, regulators have said.
“We regret how this issue impacted our customers. We are finalizing our
