Wells Fargo & Company (NYSE: WFC) announced on Friday that it has agreed to pay $1 billion in penalties to federal officials to settle consumer issues in its automotive and mortgage units businesses.
Under the agreement, Wells Fargo will pay $500 million in penalties to both the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. Wells Fargo previously disclosed the possibility of a fine this size to shareholders.
The fine covers consumer issues when the bank revealed last year that it had automatically implemented an unwanted insurance on customers who took out car loans, which caught the attention of U.S. regulators, leading to a probe.
“For more than a year and a half, we have made progress on strengthening operational processes, internal controls, compliance and oversight, and delivering on our promise to review all of our practices and make things right for our customers,” said Timothy J. Sloan, president and chief executive officer of Wells Fargo.
“Our customers deserve only the best from Wells Fargo, and we are committed to delivering that.”
Wells Fargo said the fines will impact its first quarter financial results for 2018 by an additional accrual of $800 million, which is not tax deductible. The accrual reduces first quarter net income by $800 million or $0.16 per share to $4.7 billion or $0.96 per share.
Wells Fargo said it would also be required to submit, for review by its board, plans detailing ongoing efforts to strengthen compliance and risk management, and its approach to customer remediation efforts, according to Reuters.