We readily acknowledge the anger of consumers who were allegedly defrauded by Wells Fargo representatives steering them into insurance products without their knowledge or approval. Reportedly, the bank issued approximately 1,500 policies to unwitting customers over a multi-year period.
After touching upon that, though, we note that the core focus of today's blog post is on another, yet related, aspect linked with that story.
Namely, that is the sheer power wielded by the California Department of Insurance, which commands oversight and enforcement powers over banks and other entities that sell insurance products. The prerogatives of the CDI are many and material concerning actors it deems have violated consumer laws and other operating regulations.
Wells Fargo knows that in an up-and-close way, having just reached a high-value settlement with the CDI concerning the above-cited matter.
There is the department's levied fine, for starters. Regulators have barred the bank from doing any insurance-linked business in the state well into the future. If Wells Fargo wants to continue doing so after expiration of its time-barred penalty, it will have to cough up millions for the privilege. That payment will be on top of $5 million that CDI insists be paid immediately for past transgressions.
And even if Wells Fargo does seek to do business in California following its term of punishment, it will have to first bide its time for a prolonged period. An article on the bank/CDI settlement pact inked yesterday notes that Wells Fargo will not be able to apply for a license "for at least two years following the expiration of [its] current licenses." Moreover, the CDI has unchecked powers to issue a thumbs-down response if it does so.
As the above case underscores, California licensing regulators like the CDI unquestionably have impressive powers over licensed businesses operating within the state.
Here's a caveat, though: those powers are far from absolute. Indeed, they have reasoned limits and can be challenged in many instances by licensed individuals and companies that are arguably suffering from unfair agency decisions.
The deep and long-established team of attorneys at the Century Law Group (with offices in multiple locales across California) helps license holders safeguard their businesses and the right to earn a living. We welcome contacts to the firm to discuss the diligent representation we routinely provide to our diverse and valued clients.