Bowing to customer pressure, Wells Fargo is reversing a policy it announced just over a month ago that it would close customers’ personal lines of credit and not issue new ones.
Late Wednesday, the bank said it won’t open new credit lines but that customers with existing personal credit line accounts may keep them open. A Wells Fargo spokeswoman told CNBC that it would maintain active accounts and reopen closed accounts for customers who request it.
In July, the bank sent a six-page letter to customers who have one of the accounts, explaining its decision to eliminate that loan product so it can focus on the growing demand for its credit cards and personal loans.
The letter acknowledged that consumers’ credit scores could dip once the account is closed. That drew a sharp response from a frequent Wells Fargo critic, Sen. Elizabeth Warren (D-Mass.).
“Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence,” Warren posted on Twitter last month. “Sending out a warning notice simply isn’t good enough – Wells Fargo needs to make this right.”
Got the message
“We heard feedback from our customers and that feedback is very important to us; we are responding by ensuring customers can keep these lines of credit open,” Wells Fargo said in a statement.
Under the revised policy, customers who have been using their credit lines will continue to have access to their accounts. Customers who haven’t used their personal lines of credit for the last 12 months must call the bank or make a transaction to keep the account active.
“For those inactive customers who do not activate their lines in one of these ways, accounts will be closed on December 2, 2021,” the bank said.
Limits on lending
Wells Fargo faces limits on the amount of money it can lend, a penalty the Federal Reserve placed on the bank until it rectifies certain compliance issues. It stems from the bank’s 2016 fake account scandal when employees were found to be creating credit card and checking accounts in customers’ names without their knowledge in order to meet lofty sales goals.
Wells Fargo ultimately agreed to pay $3 billion to resolve civil and criminal charges stemming from that scandal. With limits on the amount of money it can lend, Wells Fargo would like to emphasize the most profitable loans, which are credit cards and personal loans.
Wells Fargo customers who have a personal line of credit account can expect to hear directly from the bank about the change in policy, either by email or by U.S. Mail.