(Bloomberg) – Wells Fargo & Co.'s admission that itcharged customers for auto policies they didn't request hasprompted an investigation by California's insurance regulator.

"The department will investigate fully to determine the extentto which California consumers were affected by improper placementof force- or lender-placed auto insurance and seek correctiveaction and penalties in the event that California's consumerprotection laws were violated," Commissioner Dave Jones said in astatement Tuesday on the watchdog'swebsite.

Wells Fargo already settled a U.S. probe last year into theunauthorized opening of savings and checking accounts. The SanFrancisco-based bank said in July that an internal review foundthat it also placed unnecessary car insurance polices withNational GeneralHolding Corp. to protect against losses on auto loans.

"These most recent revelations by Wells Fargo are particularlytroubling," Jones said.

Insurer defends practices

The commissioner said his office is also reviewing the insurerand that his department will work with other state regulatorsinvestigating National General and Wells Fargo. The bank has saidit may pay as much as $80 million to affected auto-loan clients— with extra money for as many as 20,000 who lost cars torepossessions. The chief executive officer of National General saidTuesday that it acted appropriately.

"We believe that our practices in this highly regulated industryare compliant," National General CEO Barry Karfunkel said in aconference call discussing quarterly results.

National General fell 5.2% to $19.47 at 11:50 a.m. after postinga second-quarter loss late Monday. That extended the drop this yearto 22%. Wells Fargo advanced 72 cents to $53.26, narrowing its losssince Dec. 31 to 3.4%.

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