For the last six years, the Consumer Financial Protection Bureau has tracked customers’ complaints about major banks — 159,158 complaints in California alone — and exposed a vicious pattern of deception and greedy practices with names that bear little connection to banking a customer can trust.
No bank evokes these troubling trends better than Wells Fargo, which recently settled a $142 million class action lawsuit for opening millions of accounts without customers’ knowledge or consent.
Investigations by the Justice Department and the Los Angeles City Attorney’s Office uncovered a poisonous internal culture fueled by a top-down system of aggressive sales goals, which mandated frontline bank workers sell as many accounts as possible, no matter the method. But the Wells Fargo scandal shouldn’t have come as a surprise. For years, bank workers had been sounding the alarm.
In the fallout, Wells Fargo finally eliminated its sales goals program.
Ending sales goals at one bank, however, doesn’t address the harsh reality of an industry-wide problem. The truth: America’s biggest banks still use predatory sales quotas. A close look at CFPB’s complaints database reads like a roll call of the nation’s biggest financial institutions — Wells Fargo, but also Bank of America, SunTrust, Citibank, Santander and US Bancorp, among others.
While Wells Fargo’s leadership boasted most loudly about its robust metrics systems, other banks were more quietly using a similar system of carrots and sticks to compel workers to sell as many products as fast as possible. And that’s where Los Angeles’s latest policy venture comes in.
The L.A. City Council is on the cusp of passing a groundbreaking ordinance that requires that banks wishing to do business with the city certify they engage in socially responsible banking, protect whistleblowers who shine a light on dangerous business practices, and do not base worker compensation on sales quotas. With this information, the city — and its taxpayers — can make a fully informed choice about the kind of partner it wants to handle its assets and banking service contracts.