Story written by Reuters at CNBC
U.S. insurer Prudential Financial said on Monday it had suspended the distribution of a low-cost life insurance policy through Wells Fargo, pending a review of how the product was sold by the bank.
California Insurance Commissioner Dave Jones told Reuters on Monday he had ordered an investigation into allegations, the latest regarding Wells Fargo’s sales practices, that retail bankers signed up customers for life insurance policies from Prudential without their permission.
The New Jersey Division of Insurance is also investigating, according to a Prudential spokesman and a news release from Jones’s office. Spokesmen for the New Jersey office had no immediate comment.
The allegations are part of a wrongful termination lawsuit filed by three former managers in Prudential’s corporate investigation division. The lawsuit was filed in New Jersey state court last week.
A class action suit against Prudential was also filed Monday in the U.S. District Court for the District of New Jersey on behalf of Wells Fargo customers who say they were unknowingly signed up for Prudential policies.
Prudential spokesman Scot Hoffman said the insurer is “in active discussions with the New Jersey Department of Insurance” about its review of the product Prudential sells through Wells Fargo, called MyTerm, and is responding to the regulators’ requests for information.
Regarding the class action suit, Hoffman said “Prudential believes the suit is totally without merit and will vigorously defend itself.”
Separately, Wells Fargo & Co said on Monday it has suspended referrals of renters’ insurance to another carrier, pending a review of how the products were sold by the bank.
Wells Fargo spokesman Mark Folk declined to name the Wells Fargo partner that sells renter’s insurance, but the bank’s website indicates it offers the policies through Assurant Inc . An Assurant spokeswoman said the company did not comment on clients.
Wells Fargo’s sales practices have been under a spotlight since September when regulators ordered the bank to pay $190 million in fines and restitution to settle charges that its employees opened as many as 2 million deposit and credit card accounts without customers’ permission.
Prudential has worked with Wells Fargo since 2014 to sell the term insurance policy, known as MyTerm, to the bank’s retail customers.
Wells Fargo employees were meant to direct customers to either self-service kiosks in branches or online to buy the insurance, without getting into specifics about the products because bankers are not licensed to sell insurance.
Customer responses in a survey conducted last year did not indicate potential fraudulent activity, Prudential said.
Prudential also said it had asked for Wells Fargo’s assistance in gathering all the necessary facts.
Former Wells Fargo employees have blamed the San Francisco-based bank’s high-pressure sales environment for its role in creating unauthorized accounts.
Some state and local governments have also suspended business with Wells Fargo, including the Pennsylvania Treasury Department.
Posted by: The Trust Advisor