Two years after Charles Scharf said that Wells Fargo was focused on restoring its brand with clients, regulators and lawmakers, the bank is still working on it and public relations specialists say there remains a long road ahead.
“You can see that a series of legacy issues meaningfully impacted our results in the quarter,” Scharf said during an earnings call in January 2020, just months after assuming the chief executive officer role in October the prior year. “We still have much more work to do to put these issues behind us. And our future depends on us doing this successfully … Ultimately, our actions will dictate when that trust is complete with you, not our word,” he said at the time.
Wells Fargo has been rebuilding its brand since then. It was during Scharf’s first few months as CEO that Wells Fargo struck a $3 billion settlement to resolve the criminal and civil investigations over sales practices and bogus account openings in the community bank division that have besieged its brand since the allegations first arose in 2016. In January, the Office of the Comptroller of the Currency terminated its 2015 consent order over dubious marketing and billing practices in the firm’s banking business.
But the firm remains under a $1.95 trillion asset cap imposed by the Federal Reserve and is facing a separate OCC consent order from 2018 over sales of mortgage and auto insurance products.
And last week, it was reported that Barri Rafferty, who has served as the firm’s head of communications and brand management since July 2020, is leaving the company on May 1. Prior to joining Wells Fargo, Rafferty spent 25 years at PR company Ketchum, where she earned a reputation for innovation and rose through the ranks to become CEO.
Rafferty didn’t have experience working at banks when she joined Wells Fargo, and the innovations she tried to implement didn’t sit well with some of the firm’s staff, the Wall Street Journal reported last week, citing sources familiar with the matter. A Wells Fargo spokesperson told the Journal the bank is grateful for Rafferty’s efforts. The bank says it is conducting an internal and external search for her successor.
Shadow Over the Wealth Biz
Barry Schwartz, president of Schwartz PR, believes that Rafferty entered a “no-win situation” at Wells Fargo. Neither Schwartz nor his agency have a professional relationship with Wells Fargo.
“What could she do? No matter how much spin you put on something, the facts remain … Wells Fargo still has a good way to go to re-earn a large amount of the trust that was lost in that scandal,” he said.
“Shuffling execs in and out of PR slots won’t do it,” he added.
Schwartz could see a scenario where reputational issues from Wells Fargo’s bank cast a shadow over its wealth management business. “There’s the real thing about fiduciary responsibility and it’s an extension of that — there’s the trust element,” he said.
Reputation and branding consultant Andy Beal — who doesn’t have a professional relationship with Wells Fargo, but is a personal customer — agrees that the past scandals hit the bank hard, and crisis management experts can only do so much.
“Bringing in a crisis management team to repair Wells Fargo's damaged reputation is akin to placing a bandage on a self-inflicted wound,” he said. “Rafferty did a great job of patching up Wells Fargo's damaged brand, but her replacement should focus more on rebuilding the character of the bank to prevent future scandals.”
Wells Fargo should work on long-term solutions, according to Beal.
“Rebuilding a company's reputation is a short-term solution that helps stem a crisis and grants a temporary stay on any lost trust in a brand,” he said. “Wells Fargo's customers and stakeholders will watch closely to ensure the bank follows through on its commitment to rebuild its trust.”
Wells Fargo declined to comment about the reputational issues and challenges and pointed FA-IQ instead to regulatory filings and comments Scharf made during a January earnings call.
“We began a process two years ago to change the culture and priorities of the company … [T]he most significant part of this prioritization was the building and implementation of an effective risk and control framework across the company,” Scharf said during the call.
“We have clear plans in place and clear owners for every regulatory deliverable we have,” he added. “We have detailed reporting on how we're progressing on those plans. We review this reporting every single week at the operating committee level.”
Scharf said the company is making significant progress, but there’s much more work to do. “It doesn't mean that we're perfect. The fact that we have multiple consent orders makes it complex,” he said during the call. “It takes time to build all of our capabilities.”
“I remain confident in our ability to continue to close the remaining gaps over the next several years,” he added. “Having said that, it continues to be the case that we're likely to have setbacks along the way.”
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