IT'S NOT EVERY DAY...

This blog has written beforehand about the growing demands on bank governance actors (including C-suite execs and members of the board), but it's not every day we see a leading regulator take such a firm stand as we did this week, against what it sees as consumer abuse and compliance failures.

Yesterday, the US Federal Reserve took what is surely an unprecedented step to restrict the future growth of the bank to EOY 2017 levels and in effect bring about the departure of four un-named board members at the BHC level. Meanwhile, Marketwatch has reported today that fines and sanctions may amount to $400 million. This action was the final policing action taken by departing Fed Chairperson Janet Yellen against the bank and appears lauded by many in finance, policy circles, government and stakeholder groups.  Senator Elizabeth Warren tweeted: For months, I have repeatedly pressed Janet Yellen to hold Wells Fargo accountable for its fake accounts scam and push out responsible Board Members. Today she did it – in her last act as Fed Chair.

Yellen added in a statement: 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 into place to make certain that abuses do not occur again.

I have been reviewing today the current director rooster for Wells Fargo and note some new additions (whom may be less happy to be the there) while the few remaining older guards may be sweating this weekend. I also find it notable that its risk committee charter, while focusing on standard risk management issues and emerging developments like cyber-risk, mentions conduct risk as one risk it will manage but fails to be a prominent issue in this document (while its code of ethics is a substantial document explaining the firm's vision, values and goals elsewhere on the firm's website).  

The BOE/PRA and FCA continue to emphasise the necessity of C-suite execs and board members in accepting personal responsibility for providing oversight of the firm in the UK, with a growing focus on conduct risks. This appears to be a  supervisory trend which will be continuing for some time.