Essay About Case Of Wells Fargo Community Bank And Annual Report

The Case of Wells Fargo Community Bank
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Melissa Schneider Sales Misconduct: The Case of Wells Fargo Community Bank        The retail banking sector stands as one of the most competitive industries in the world. The industry entailed the provision of various banking services and financial commodities which include “deposit accounts, debit cards, basic investment vehicles such as certificates of deposit (CDs), mortgages, auto loans, other types of personal loans, credit cards, and lines of credit” (Srinivasan et. al 2). Wells Fargo’s Community Bank, with $12.4 billion net income as reported in its Annual Report, is one of the major players in the retail banking industry.        As a strategy to meet competitive pressures, Wells Fargo’s Community Bank involves strategic practices such as cross-selling, setting and overshooting sales goals, and sales-driven or sales-dependent promotion, compensation and rewards systems. Such practices, from a business company’s point of view are beneficial as they guarantee increased revenues for Wells Fargo. However, if one puts into consideration, ethical, moral and legal considerations, the afore-cited practices by the community bank have basically gone overboard. That is, the burden of pressuring sales staff to overshoot targets along with the competitive and strict work environment has cultivated a culture of fraud and malpractices within the company (Srinivasan et. al 2). Sandbagging and bundling as well as creating phony accounts and customer details were some malpractices existing within the company. While it is true that the company has risk management and internal control systems, the fact also remains that the community bank’s top authorities promulgate and reinforce the sales-driven system within the company themselves thereby making regulation and constructive reprehension impossible or difficult to say the least.        As an aftermath of such malpractices, Wells Fargo was forced to pay fines amounting to more or less $200 million. That is apart from the 5,300 employees who were fired or dismissed because of involvement to these fraudulent activities (Srinivasan, et. al 11). These consequences, I believe suffice the degree of misconduct perpetrated by Wells Fargo’s Community Bank. However, the truth remains that no amount of money or no number of fired employees could commensurate the lost trust and confidence of Wells Fargo’s patrons and consumers. That is, in the banking industry where company-consumer relationship is founded on trust and credibility, a trust broken once is a trust broken forever.