US life insurer Prudential Financial is to suspend the distribution of MyTerm policies through all Wells Fargo bank branches and website, pending the results of Prudential’s review of how the product is sold by Wells Fargo.
Launched in 2007, MyTerm is a simplified issue term insurance product that was created to give customers greater choice and access to life insurance through a self-assisted, technology-enabled application process.
In June 2014, Prudential Financial entered into a distribution agreement with Wells Fargo, whereby the MyTerm product was made available to Wells Fargo customers through self-service kiosks in Wells Fargo bank branches and its website.
Last year, Prudential Financial's ndividual life insurance business surveyed Wells Fargo customers about their experience with MyTerm, including reasons why some of them allowed the product to lapse.
The customer responses did not indicate potential fraudulent activity. Following the revelations about Wells Fargo’s sales practices this autumn, Prudential expanded its review into how the product was sold and asked for Wells Fargo’s assistance in gathering all the necessary facts.
Steve Pelletier, executive vice president and chief operating officer of Prudentia Financial's US Businesses, said: "We stand behind the MyTerm product but have decided to suspend sales of that product through Wells Fargo’s retail banking franchise until we have all the facts about whether it is being distributed properly and in the best interest of customers."
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He added: “While our review is ongoing, Prudential remains squarely focused on doing what is right for our customers. 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. We have also set up a toll-free hotline for these customers.”
The move by Prudential Financial comes as Wells Fargo had been engulfed in a banking scandal, and was fined $100m 8 September 2016 by the US Consumer Financial Protection Bureau (CFPB) for widespread unlawful sales practices.
According to the CFPB, Wells Fargo's employees secretly opened accounts and shifted funds from consumers’ existing accounts into these new accounts without their knowledge or permission to do so, often racking up fees or other charges.
The CFPB added that the bank had compensation programmes for its employees that encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards, and online banking.