Wells Fargo to Stop Paying Brokers Bonuses for Selling Loansby
Wells Fargo & Co. will no longer offer bonuses to brokers who persuade customers to take out loans from other parts of the bank as the firm grapples with fall-out from a cross-selling scandal.
The lender’s brokerage unit will keep its basic pay grid in place for 2017, but will do away with bonuses for selling clients products such as mortgages, securities-backed loans or lines of credit, according to a personal familiar with the change, who asked not to be identified discussing compensation policies.
The company has faced a barrage of criticism and calls for closer scrutiny since it was fined $185 million by regulators in September for possibly opening more than 2 million retail bank accounts without customer approval. The San Francisco-based firm is still the focus of investigations by federal, state and local authorities, and on Tuesday failed for a second time this year to persuade regulators that it can unwind its business without damaging the financial system.
Wells Fargo has said it fired 5,300 retail bank employees in recent years over cross-selling abuses and eliminated sales goals linked by regulators to the strategy. The Financial Industry Regulatory Authority, the Wall Street-funded watchdog that regulates the brokerage, has asked Wells Fargo employees whose securities registrations were terminated to contact them if they have concerns about their dismissal from the bank.
The website AdvisorHub reported earlier on the bonus change. Wells Fargo gained about 1 percent Thursday in New York trading to $55.19.
The bank is also ending monthly incentive pay for some call-center employees in response to federal conflict-of-interest rules for retirement accounts, according to the Charlotte Observer. The change affects about 70 employees, including about 50 in Charlotte, who work in centers that field calls from wealth and investment-management clients, the North Carolina newspaper reported late Wednesday, citing people familiar with the matter.