Last summer, Wells Fargo was fined $100 million by the Consumer Financial Protection Bureau after the bank was revealed to have created up to 2 million credit card and deposit accounts without permission.
The scandal may not have particularly hurt its stock, which enjoyed the same run as other bank stocks in the wake of the election as the financial industry salivated over deregulation promised by the Trump administration. But it has led to customers to leave and new consumers to be wary of the bank: the rate of new checking and credit card accounts has been down.
After his predecessor John Stumpf left entrenched in controversy, Wells Fargo’s new CEO Timothy Sloan has a large job ahead of him to regain customers’ trust.
One of the first things that Sloan is doing is changing how employees are compensated.
“We let an incentive plan drive behavior for our team members and some of that behavior was inappropriate,” Sloan said at the Yahoo Finance All Market Summit in New York. The commission-based model that led to the scandal was researched a few years earlier by two professors, who found it invariably leads to trouble and possibly fraud.
“One of the changes we wanted to make for our team members is to roll out a new incentive compensation program that’s focused on service more than what we had before,” Sloan said.
All this followed a major review with all eyes on the San Francisco-based bank. “We’ve done a very exhaustive review, made changes in our business model, reassigned risk, rolled out a new incentive plan, and made things right with customers,” Sloan said. “We have to make sure we make things right for our customers and team members.” To do all this, the bank brought in third parties during its review “to make sure we’ve opened every drawer.”
Of course, this doesn’t eliminate the possibility of more skeletons hiding in the closet. “We take risk every day so there’s always something new to deal with,” Sloan said. “My role is to make sure something like this doesn’t happen again. I can’t promise you that’s the case.”
Since the scandal, however, the bank has taken a more holistic view of its business than a pure shareholder view. During the review process, the bank looked at everything, constituency by constituency, evaluating the bank’s activities from each group’s perspective, Sloan said. This led to the compensation plan change for employees as well as a 12% pay bump for the lowest paid employees. The company is also working to ensure sure the workforce has a voice that is heard.
To this end, Sloan noted that the bank was focusing on what’s right for “customers and team members.” In an industry that increasingly puts shareholders as its overwhelming priority, it’s likely a welcome change.
More from Yahoo Finance’s All Markets Summit.
More from Yahoo Finance’s All Market Summit: