One of the giants of the US insurance sector has clashed with one of the country’s biggest banks after Prudential Financial announced earlier today that it will suspend its distribution of insurance policies through Wells Fargo.
The decision comes as a sales practice scandal rocks the San Francisco-based bank. It was announced back in September by the Los Angeles City Attorney Office and federal regulators that the bank may have opened as many as two million credit card and deposit accounts without the knowledge of consumers – leading to a $185 million fine for what was dubbed as “widespread illegal” sales practices. The controversy was followed by John Stumpf stepping down as the company’s chief executive.
Prudential has been embroiled in the controversy because of its MyTerm life insurance policy which it agreed to sell to Wells Fargo customers via self-service kiosks at the bank’s branches and through its website back in 2014. However, employees of the banks were not supposed to get into the specifics of the product as they are not licensed to sell the insurance – yet in a wrongful termination lawsuit filed last week it was suggested that some bank employees has signed up customers for the Prudential policies without the customers’ permission.
Now, Prudential COO Steve Pelletier has moved to distance the company from the scandal telling the Wall Street Journal that “if any Wells Fargo MyTerm customers have concerns about the way in which the product was purchased, we will reimburse the full amount of the premiums they paid and cancel the policy.”
Since the allegations, some state and local governments have suspended business with Wells Fargo. Prudential has suspended its sales through the bank, pending a review.
