The U.S. Federal Reserve has banned the San Francisco-based bank Wells Fargo from growing its business due to its widespread consumer abuses and other compliance breakdowns.
The Fed imposed more penalties on the bank and required it to improve its governance and risk management processes, including enhancing oversight effectiveness by its board of directors.
“Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017,” said the Fed in a statement.
At the same time, the Fed also ordered the bank to replace three current board members by April and another one by year-end.
The new penalties were announced late Friday on Fed Chair Janet Yellen’s last day at the central bank.
The Fed’s penalty will not require the bank to cease current activities, such as accepting customer deposits or making consumer loans.
Wells Fargo has admitted that employees opened more than 2 million fake accounts in order to meet sales quotas without customers’ authorization from 2011 to 2015.
In September 2016, the bank agreed to pay 185 million U.S. dollars in fines to American regulators to settle a class-action suit for 142 million dollars.
More recently, Wells Fargo was found charging hundreds of thousands of auto loan customers for auto insurance they did not need.
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” said Yellen.