By now, most have read about the consent orders issued by the CFPB and the OCC concerning Wells Fargo. The consent orders ordered the bank to pay a total of $185 million in civil monetary penalties ($100 million to the CFPB, $50 million to the OCC, and $35 million to the City and County of Los Angeles), as well as reimbursing customers an estimated $5 million. The CFPB alleged that Wells Fargo employees, in an effort to boost sales figures and earn bonuses: (a) opened deposit and credit card accounts without customer consent; (b) moved funds from authorized accounts to the new deposit accounts without customer consent; (c) enrolled customers in online banking services they did not request; and (d) ordered and activated debit cards business customer information again, without customer consent. The consent orders shine a giant spotlight on the problems that can occur when employees are provided incentive compensation without adequate compliance management systems in place to ensure bad things don’t happen. The CFPB is quick to say they do not prohibit incentive compensation but do advise that “companies need to pay very close attention to make sure they have effective monitoring in place to ensure that consumers are protected.” Prepared Remarks of Richard Cordray (Sept. 8, 2016).
As with many of the Consent Orders issued by the CFPB and other federal regulators, the Consent Orders issued as to Wells Fargo are an excellent starting point for others in the financial industry to begin in assessing whether their own compliance management systems regarding incentive compensation are adequate.
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Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws. Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker....LEARN MORE