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Wells Fargo Faces Another Probe over Auto Insurance Business

Zacks

Wells Fargo & Company’s WFC guaranteed auto protection (GAP) insurance program is currently under investigation by the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau.

Under the bank’s GAP insurance, a customer gets coverage on the difference between the amount he owes on a car loan and the value an insurance company will give him if the car is destroyed in an accident or stolen. The customers are entitled to a refund of some portion of the GAP insurance in case loans are paid off early.

In its filing issued last week, the bank disclosed that it found some issues relating to its GAP insurance product. The borrowers were not returned the amount they were entitled to.

Wells Fargo has now started issuing refunds to the eligible customers in several states. Further, the bank is closely monitoring its auto-lending business as it fears that it may drive attention of the regulators.


Currently, Wells Fargo is in midst of a number of pending probes and lawsuits, which are not likely to end anytime soon. In Jul 2017, the news of the bank forcing unwanted insurance on its clients had come out. The OCC is likely to take steps in this regard. Further, the insurance regulator of California would begin a probe on the matter soon.

In the last one year, shares of the company have gained only 9.4%, underperforming the 37.5% rally for the industry it belongs to.

Currently, Wells Fargo carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the finance space are Washington Federal, Inc. WAFD, Carolina Financial Corporation CARO and The Bank of New York Mellon Corporation BK.

Washington Federal’s Zacks Consensus Estimate witnessed an upward revision of nearly 1% for current-year earnings, over the past 30 days. Also, its shares have gained 32.2%, over the last one year. The company has a Zacks Rank #2 (Buy).

Carolina Financial witnessed an upward earnings estimate revision of 4.5% for the current year, over the last 30 days. Its share price has increased 64.9% in the last one year. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BNY Mellon carries a Zacks Rank #2. For the current year, its Zacks Consensus Estimate was revised 1.1% upward in the last 30 days. The company’s share price has increased 35% in the last one year.

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