Students who find writing to be a difficult task. Change ), You are commenting using your Facebook account. Wells Fargo & Co. is a financial services company and the “fourth largest bank in the United States by assets” (Dixon, 2020). First of all, by not offering an incentive for quota purposes. This could have shown the establishment of a culture of compliance within the organization ­­– attributes that are “established by top management, characterized by senior management example, embedded in activities such as education, reinforced by incentive systems, given force through the treatment of transgressors, integral to information systems and their use and management, and inseparable from the organization’s structure, processes, and management style”(LeGrand, 2005). Different ethical issues can be addressed using different ethical platforms depending on the sensitivity of the matter. Wells Fargo could have done so much more immediately in the wake of the scandals. A Brief Wells Fargo 's Fraudulent Accounts Issue 1202 Words | 5 Pages. Results showed that before the scandals, negative perceptions were 15 percent. Want us to write one just for you? How a company responds and resolves the issue can become detrimental to the bottom line of success and growth. This could have instilled some confidence in consumers that everything was being taken seriously and work was being done to restore trust. The 15 Largest Banks In America. The company needs to have a good moral compass and make sure that all employees do as well. When you create a reward, but do not monitor how it achieved or earned, then you begin to allow employees to engage in unethical business practices. How a business responds and resolves the issue can turn into detrimental to the bottom line of success and development. “In 2016, a survey was done of 1500 bank customers. Wells Fargo gets poor reputation ranking to start 2020. Wells Fargo fired the Pomona, California branch manager for using the very protections the government put in place to protect Americans from this egregious behavior: the Wells Fargo’s Whistleblower Hotline. The most evident ethical issue with the 2008/2009 Wells Fargo scandal was the loss or misuse of trust, which resulted in the loss of integrity of Wells Fargo employees. In addition to 5,300 employees being fired, if a change from an internal to an external CEO had happened earlier, consumers would have been given the signal that corporate cultural change was happening (Egan, 2016). Then, in 2016, its pattern of wrongdoing became public. How Wells Fargo’s Fake Accounts Scandal Got So Bad. Retrieved February 3, 2018, from https://www.latimes.com/business/la-fi-wells-fargo-ad-campaign-20180509-story.html, Shen, L. (2018, August 1). Not everyone is buying it. Asked then to opine on the statement that businesses focus on their own agenda, rather than considering wider society, 75% agreed. Wells Fargo does not endorse and is not responsible for their content, links, privacy, or security policies. ( Log Out /  The loss of honesty for a personal incentive had an effect on the corporation as a whole. We’ve got you covered. 5,300 Wells Fargo employees were forced to resign or were fired amid a huge scandal involving hundreds of thousands of customers and millions of dollars. • We treat one another with fairness and dignity; we do not tolerate dis crimination, harassment, or intimidation. And Wells Fargo was trying to run an ethical business, despite its huge blunder. Change ), https://doi-org.ezproxy.snhu.edu/10.1362/204440814X14103454934258, https://www.wellsfargo.com/about/corporate/governance/scharf/, https://www.nytimes.com/2017/01/13/business/dealbook/wells-fargo-earnings-report.html, https://www.journalnow.com/business/wells-fargo-gets-poor-reputation-ranking-to-start/article_85d087d0-6bf7-5fbc-87e0-a4577ed0d11e.html, https://www.bankrate.com/banking/biggest-banks-in-america/, https://money.cnn.com/2016/10/24/investing/wells-fargo-fake-accounts-angry-customers/index.html, https://money.cnn.com/2018/07/13/news/companies/wells-fargo-earnings-stock/index.html, https://fortune.com/2016/09/15/wells-fargo-scandal/, https://www.qualitymag.com/ext/resources/files/white_papers/BuildingaCultureofCompliance-IBS.pdf, https://www.latimes.com/business/la-fi-wells-fargo-ad-campaign-20180509-story.html, https://fortune.com/2018/08/01/wells-fargo-, https://www.forbes.com/sites/samanthatodd/2019/09/27/new-ceo-at-wells-fargo-faces-a-heavy-lift/#228a57a27431financial-crisis-fine-mortgage-backed-security/, https://www.barrons.com/articles/wells-fargo-makes-a-clean-break-51553908012. When misconduct becomes the central focus of attention, an organization has the opportunity to show that they have better ethical norms or they become perceived as non-strict enforcers to ethical practices. Are you interested in getting a customized paper? The report stated Wells Fargo had an unhealthy “pressure-cooker” sales culture. “New credit card applications were down 43 percent in the fourth quarter of 2016 from 2015, and new checking account openings fell 40 percent” (Corkery, 2017). This was the case for Wells Fargo Bank, the growth of the company led to added pressure on employees and less emphasis on company honesty. Retrieved February 8, 2020, from https://money.cnn.com/2016/10/24/investing/wells-fargo-fake-accounts-angry-customers/index.html, Egan, M. (2018, July 13). There is need to ensure that there is an ethical culture that keeps a tab on the business ethics practiced by the organization globally. But the bank’s management set unrealistically high sales goals for its employees, encouraging many employees to game the system. CEO Charles Scharf apologises for comments blaming ‘limited pool of Black talent’ for lack of diversity in recruiting. (n.d.). We can custom edit this essay into an original, 100% plagiarism free essay. Wells Fargo and Moral Emotions. GradesFixer.com uses cookies. On September 8, 2016 they finally fined the bank $185 million US. The bank reported 24.3 million customers who actively use their checking accounts. Many employees did speak up, and the company retaliated, firing … Once Stumpf did ultimately step down, Chief Operating Officer Tim Sloan took over. The philosophy of ethics and the corporate conscience. All rights reserved Gradesfixer ™, “Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures.”, Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures [Internet]. Wells Fargo Ethical Issues Lead to Class Action Suit November 13, 2017 by Beck Law P.C. In 2008/2009 Wells Fargo mandated a companywide quota for opening, or the cross selling of services, on new customer accounts by employees. Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures In today’s society the scandals that hit huge corporations are found and discussed speedily due to the use of the media. ( Log Out /  Those “free” accounts promised by employees to customers were actually premium accounts, Wells Fargo premium accounts are associated to large fees. More so, when Wells Fargo executives discovered that there was an issue with fake accounts they needed to stop the program, announce the issue, and resolve before it got worse. The knowledge and distribution of incentives to employees for cross-selling services and accounts began the largest issue of Wells Fargo’s scandal. Retrieved February 5, 2020, from https://www.qualitymag.com/ext/resources/files/white_papers/BuildingaCultureofCompliance-IBS.pdf, Peltz, J. F. (2018, May 9). As penalty, “they agreed to pay $2.09 billion for actions that allegedly contributed to the 2008 Financial Crisis” (Shen, 2018), and a $1.2 billion fine paid in April 2016” (Shen, 2018). We provide you with original essay samples, perfect formatting and styling. It is also a brand that has faced many ethical and legal issues. Wells Fargo & Co. “deceived the Federal Housing Administration into insuring risky mortgages that were ineligible for federal support between 2001 and 2008” (Shen, 2018). Wells Fargo stands as another testament to the consequences of ignoring ethics and compliance. 2019 Jun 12 [cited 2021 Jan 12]. Here is what happened. Did you catch that? The loss of honesty for a personal incentive had an effect on the corporation as a whole. Wells Fargo & Co. is a financial services company and the “fourth largest bank in the United States by assets” (Dixon, 2020). In a recent Deloitte survey, respondents were asked to agree or disagree with the proposition that businesses behave in an ethical manner. https://doi-org.ezproxy.snhu.edu/10.1362/204440814X14103454934258, Charles W. Scharf. (2020, January 2). Those large fees lead to over drafted accounts and those over drafted accounts lead to larger issues such as ruining a customer’s lines of credit. Change ), You are commenting using your Google account. Having trouble finding the perfect essay? Retrieved February 3, 2020, from https://www.bankrate.com/banking/biggest-banks-in-america/, Egan, M. (2016, October 24). The choices made were companywide in order for all who participated to benefit. Wells Fargo ranked 96th “(Craver, 2019). Californian and federal regulators took three additional years to take action against Wells Fargo. Wells Fargo Struggling in Aftermath of Fraud Scandal. It is also a brand that has faced many ethical and legal issues. OSHA has since ordered Wells Fargo to reinstate the whistleblower’s position, awarded $577,500 in back pay, damages and attorney fees(CNN). A similar surveyin Britain resulted in just 52% of respondents saying they felt businesses behave ethically. Several regulatory bodies opened investigations into Wells Fargo following the article. Retrieved February 8, 2020, from https://money.cnn.com/2018/07/13/news/companies/wells-fargo-earnings-stock/index.html, Kouchaki, M. (2016, September 15). These scandals “inflicted serious damage on the Wells Fargo brand” (Egan, 2016). Retrieved February 3, 2020, from https://fortune.com/2016/09/15/wells-fargo-scandal/, Le Grand, C. H. (2005). Carberry, E. J., Engelen, P., & Van Essen, M. (2018) found that the costs of misconduct by corporations begins with the cost of replacing employees and can lead to reputation penalties, which can be rooted to the decline of a corporations stock price and loss of stakeholders. You can get 100% plagiarism FREE essay in 30sec, Sorry, we cannot unicalize this essay. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. This is not an example of the work written by professional essay writers. The ethical dilemma of Wells Fargo. It would have been a good decision for then CEO John Stumpf to have stepped down right away (Walsh, 2019). After the scandal, negative perceptions rose to 52 percent” (Egan, 2016). It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses. Wells Fargo was regarded for years as one of America’s best banks. Wells Fargo, in its formal ethics program, did train employees to avoid unethical behavior, and counseled them to call the company’s ethics hotline if they suspected anyone was behaving unethically. People witnessed the downfall and bankruptcy of huge financial institutions like Lehman Brothers, Merrill Lynch and several other key members of the fraternity. Retrieved February 3, 2020, from https://fortune.com/2018/08/01/wells-fargo-, Todd, S. (2019, September 27). More effective, and what has now happened, is that an outsider, Charles W. Scharf, is currently at the helm and has the opportunity to “really define the company and its destiny” (Todd, 2019). Still, in 2020, Wells Fargo has “considerable work to do in rehabilitating its reputation with federal lawmakers and consumers” (Craver, 2019). By continuing we’ll assume you board with our cookie policy. The virtue theory is made up of four characteristics. 5 OUR CODE OF ETHICS AND BUSINESS CONDUCT People As team members and representatives of Wells Fargo, we always value and support one another. The damage to its reputation is staggering and the ability of the bank to recover will depend on a sustained commitment to ethics and compliance and careful management of its business practices. In an attempt to correct the situation, Wells Fargo fired 5,300 participating employees, which amounts to about 1 percent of the 300,000 total company employees. ( Log Out /  Retrieved February 8, 2020, from https://www.forbes.com/sites/samanthatodd/2019/09/27/new-ceo-at-wells-fargo-faces-a-heavy-lift/#228a57a27431financial-crisis-fine-mortgage-backed-security/, Walsh, B. The bank offered many different services to its customers. Approximately half of the people (or at least those surveyed) believe that business is unethi… To export a reference to this article please select a referencing style below: Sorry, copying is not allowed on our website. In analyzing the Wells Fargo fake account scandal from the ethical theory of Kantianism, this case is most certainly ethically impermissible. Piazza & Jourdan (2018) recognized that without publicity, an organizations misconduct may or may not alter organizational membership, meaning that if not caught, employees would stay to reap the benefits to their paychecks. New York (CNN Business) Wells Fargo was hit with a $3 billion fine Friday by federal authorities outraged by the millions of fake accounts created at the troubled bank over many years. Despite Wells Fargo’s public statements that the scandal was confined to the retail sales group and that the majority of the company “does the right thing,” there was plenty of evidence that the ethical fading ran wide and deep throughout the company. This was the case at Wells Fargo where employees had to participate in unethical business processes in order to meet their expectations. On September 8, 2016, Wells Fargo, one of the nation’s oldest and largest banks, admitted in a settlement with regulators that it had created as many as two million accounts for customers without their permission. The bank admitted that … Wells Fargo lost so much public trust for the bank’s shady business practices, which came to light in the aftermath of the Great Recession, that it … Despite its reputation issues, Wells Fargo is still recruiting new customers. 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