Wells Fargo cannot seem to get out of its own way to begin to move forward.
Now, the bank is facing a whistleblower lawsuit and investigation by the Consumer Financial Protection Bureau (CFPB) for closing fraud victims’ accounts without investigating potential criminal activity, which a bank is required to do by law. This action was also in direct opposition to the bank’s mandate to investigate whether criminal activity occurred, or to help their customers as much as possible to resolve the issue.
The bank employee who raised his hand most often to point this out has filed a whistleblower lawsuit, claiming he was fired for his troubles (the bank claims he is simply a disgruntled ex-employee). The CFPB is investigating the bank’s practice of freezing and closing customer accounts where fraud was detected, regardless of the reason.
This “yet another” Wells Fargo legal and reputational issue points up a key part of any compliance program: to investigate and report to persons who raise their hands and speak up and why, after the Supreme Court’s decision in Digital Realty Trust v. Somers, it is even more important to do. The problem for Wells Fargo is that they treated customers so badly by engaging in this process, it provides yet one more plank in the very strong argument that the bank was not interested in its customer base.
For any compliance practitioner, any issue which comes in for review—whether through the hotline, direct reporting, or any other form of communication—there should be an initial acknowledgement that the report has come into the compliance office. From there, it should be triaged and then given an appropriate level of investigation. Next is remediation, if warranted and escalation if required. Finally at some point, the compliance practitioner should communicate with the original reporter on the results and resolution.
This approach will go a long way toward keeping a company in the situation where an employee will run to the SEC as it is the only place under which it can find legal protection for whistleblowing. In the case of Wells Fargo, such an approach might have saved it from further scrutiny from the CFPB.