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California Regulators Seek Sanctions Against Wells Fargo Over Force-Placed Auto Insurance

SACRAMENTO, Calif., Dec 06, 2017, (A. M. Best via COMTEX) --

The California Department of Insurance is seeking to suspend or revoke Wells Fargo sales licenses following a department probe alleged the banking chain forced unneeded automobile insurance on roughly 1,500 borrowers who obtained vehicle loans through the bank.

“Companies that are licensed to transact insurance have an obligation to act with integrity, comply with all state and insurance laws and represent the best interests of consumers,” Insurance Commissioner Dave Jones said in a statement. “When any producer violates consumer trust in the name of profit, it reflects poorly on the entire profession.”

The CDI is seeking the sanctions following a department investigation that found from 2008 to 2016, Wells Fargo customers were issued insurance policies and allegedly charged premiums without their knowledge or permission.

The department is seeking to suspend or revoke Wells Fargo’s licenses to transact personal insurance in California. However, the national bank chain last month said it was leaving the personal insurance business and began winding down marketing and product promotion activity.

The 1,500 cases identified by the CDI are a sliver of the 800,000 borrowers nationwide who obtained vehicle loans through the bank and were allegedly erroneously charged for coverage. Roughly 25,000 had their vehicles wrongfully repossessed, according to a report released by the office of U.S. Rep. Maxine Waters, D-Calif. (Best’s News Service, Oct. 3, 2017).

Wells Fargo had a commercial insurance agreement with National General under which National General was instructed to place collateral protection insurance on any auto loans for borrowers that National General or Wells Fargo could not confirm had insurance to cover the outstanding balance of the auto loan, the report said. However, many consumers were charged for CPI when they actually didn’t need the coverage, the report said.

In November, Wells Fargo said it anticipated paying out about $130 million to consumers hurt by its business tactics that included forcing unneeded automobile insurance. The new total is approximately $50 million more than original estimates, the bank said in a filing with the U.S. Securities and Exchange Commission (Best’s News Service, Nov. 7, 2017).

Attempts to obtain comment from Wells Fargo officials were unsuccessful.

(By Frank Klimko, Washington correspondent, BestWeek:

Frank Klimko

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