June 7, 2018 / 7:48 PM / in 4 months

Phony bank accounts not a 'systemic' issue: U.S. regulator

WASHINGTON (Reuters) - A U.S. bank regulator said on Thursday that an industry-wide review prompted by Wells Fargo & Co’s (WFC.N) sales practices scandal had uncovered some instances of phony accounts at other lenders but little evidence of a “systemic” problem.

FILE PHOTO: A Wells Fargo bank sign is pictured in downtown Los Angeles, California, U.S. August 10, 2017. REUTERS/Mike Blake/File Photo

The Office of the Comptroller of the Currency reviewed more than 40 large and midsize banks after Wells Fargo’s phony accounts scandal first erupted in 2016, wrapping up the process at the end of 2017. The full findings have not been made public.

The OCC said in a statement that it had not identified any “systemic issues” at the other banks mirroring those at Wells Fargo, where bank employees had created potentially millions of unauthorized accounts in customers’ names to meet sales goals.

But the review did uncover “some weaknesses” in internal sales practices, the OCC statement said. In particular, few banks had a centralized approach to risk governance over sales practices before the regulatory review.

The OCC said it had notified banks earlier in 2018 of any particular issues that turned up in the review, and that most banks took “timely actions” to address those weaknesses after they were identified by the regulator.

The OCC also found some instances in which accounts were opened without customer consent. It did not specify how many improper accounts it had found at other banks, but said reasons why the accounts were opened had included sales promotions lacking in risk controls or “isolated” instances of employee misconduct.

There was no evidence that any of the unauthorized accounts found at other banks had been opened by bank employees in order to meet to sales incentives or quotas, the OCC said.

Those banks have either already addressed any unauthorized accounts or are taking remedial action, including closing the accounts and refunding any improper fees, the OCC said.

A Wells Fargo spokesperson declined to comment.

Reporting by Pete Schroeder; Editing by Meredith Mazzilli

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