We fined Wells Fargo a historic $100 million for the illegal practice of secretly opening hundreds of thousands of unauthorised deposit and credit card accounts.”
Log in to the home page of the US watchdog Consumer Financial Protection Bureau (CFPB)http://www.consumerfinance.gov/ , a government agency set up to ensure that consumers of financial products are treated fairly by banks and other lenders, and you see this as the top featured story.
What’s the Wells Fargo story and why is it relevant to us? Wells Fargo is one of the biggest banks in the US, and is known to be an aggressive cross-seller of financial products. Cross-selling is something we’re all familiar with—you have a savings account with a bank and it pushes other products at you: loans, funds, insurance, cards.
Expense Account, Mint
ig business and banks do not like you. Well, let me rephrase that. They don’t like you getting a fair deal, but they like the money they can make off you. And they have the power to nudge policy and regulators to do what they want. Why else would each step forward in getting a fair deal to consumers of financial products need to be fought for so hard? It took the Indian banking regulator at least 10 years of work to change a grossly unfair formula that calculated the rate of interest we get on our savings deposit in such a manner that the least possible return would come to the retail consumer. The regulator is still unable to free the savings rate that is fixed at 4% when all other rates are linked to the market and is unable to stop the systemic defrauding of bank consumers by “relationship managers” selling unsuitable products. The story is larger and more scary at the other side of the world where the banks that were too big to fail brought the world to the edge and only taxpayer handouts and a leverage on the future taxpayer could save it. And we’re not so sure we’re out of the woods just yet. Or how stable the save is.