Wells Fargo & Co (WFC.N) began examining the way its auto lending unit enrolled borrowers into insurance policies a year ago, but did not plan to disclose problems it uncovered until it was ready to issue reimbursements to affected customers, its head of consumer lending told Reuters on Friday.

In an interview, Franklin Codel said the business started noticing elevated customer complaint volumes in July 2016. It quickly suspended its auto collateral protection insurance (CPI) program and escalated issues to senior management, the board and regulators, he said.

"The problem with disclosing to the marketplace today or several months ago is customers start calling and asking when they're going to get their money," he said.

Wells, the third-largest U.S. bank, has been embroiled in a scandal since last September in which thousands of branch employees created as many as 2.1 million phony deposit and credit-card accounts in customers' names without their permission over a period of several years.

The bank has faced questions from investors over whether its disclosures about sales abuses were timely or adequate, and whether problems extended beyond its retail bank.

Since that time, lawmakers have released information suggesting small business and brokerage customers may have had phantom accounts opened in their names, and Prudential Financial Inc (PRU.N) cut ties with Wells over accusations that bankers were improperly enrolling customers in its insurance policies without their knowledge.

On Thursday evening, the New York Times revealed that 800,000 of Wells Fargo's auto borrowers were charged for insurance they did not need, prompting the bank to issue a press release detailing its remediation efforts.

Wells plans to return US$80 million to 570,000 customers who were wrongly charged.

Its auto lending business has been going through an overhaul this year to better manage risk and install new leadership. Dawn Martin Harp, who headed the auto lending business during the sales abuses, retired in April and her deputy, Bill Katafias, also departed.

"Both of those executives, in my view, were held accountable for their actions," Codel said, including "from a compensation perspective."

Katafias did not return a call to his office and Martin Harp could not be reached.

Wells Fargo shares fell 2.6 per cent to US$53.31 on Friday afternoon. Although the stock has recovered from a sharp decline last year, analysts have said ongoing fallout from the sales scandal has dampened performance.

In a statement on Friday, New York City Comptroller Scott Stringer, who controls funds that hold Wells Fargo stock, demanded better disclosures about the auto insurance problems and called for a new independent chairman of the board.

The board "needs to be overhauled - now," Stringer said.