NEW YORK (Reuters) - Wells Fargo & Co directors could have avoided a shareholder backlash over a sales practices scandal if they had paid more attention to scores of whistleblowers who complained, in vain, for years.

FILE PHOTO: A Wells Fargo logo is seen in New York City, U.S. January 10, 2017. REUTERS/Stephanie Keith

A slow response to warnings is not unique to Wells Fargo, but it is an immediate concern at the third-largest U.S. bank, whose board is facing a no-confidence vote at its annual shareholder meeting on Tuesday.

Wells Fargo has been engulfed in scandal since September, when it reached a $190 million settlement with regulators over complaints that its retail banking staff had opened as many as 2.1 million unauthorized client accounts. The bank fired 5,300 employees for improper sales tactics over five years, but did not make more substantive changes to policies and procedures or hold managers accountable until there was a public outcry.

An third-party investigation commissioned by the board found such practices were not flagged as “a noteworthy risk” until 2014, even thought lawsuits and complaints suggested the problem existed at least as far back as 2010.

George Sard, a spokesman for Wells Fargo’s board, declined to comment. The bank’s spokeswoman Richele Messick said Wells Fargo takes the issue “very seriously” and detailed multiple steps the bank has taken to improve procedures since the scandal erupted, including reviews of its ethics hot line and new standards and training for employees.

“It’s critical that all team members feel safe escalating concerns, and have confidence those concerns will be addressed,” Messick said.

Influential proxy advisor Institutional Shareholder Services recommended shareholders vote against 12 of its 15 directors, including Chairman Stephen Sanger, arguing directors failed in their oversight duties for years leading up to the settlement.

The Wall Street Journal reported on Sunday that several directors were at risk of losing re-election based on a tally of those who have already cast ballots.

Sanger, who led the internal investigation after being installed as independent chairman in October, had faced controversy involving whistleblowers before.

In 2004, an employee sued General Mills Inc, the company Sanger ran from 1995 to 2007, for allegedly retaliating against him after he raised concerns that the company was shipping more products to retailers than they wanted to artificially boost sales figures.

General Mills and the employee ultimately agreed to settle out of court and the U.S. Securities and Exchange Commission dropped a probe it had launched without bringing a case.

Sanger did not return a request for comment and Sard declined to comment on his behalf. The whistleblower could not be reached.

Nancy Bush, an analyst with NAB Research who owns Wells Fargo shares, said she was unaware of the General Mills episode, but thought it should not affect Tuesday’s vote. Instead, shareholders should focus on Sanger’s track record at Wells Fargo, she said, echoing a sentiment shared by other analysts and investors reached by Reuters.

“In the years since the financial crisis ... a corporation’s obligation to listen to whistleblowers has changed – very much so,” Bush said. “I don’t think the experience of 2004 is necessarily applicable to today’s environment.”

HOTLINES AND SURVEYS

Attorneys and consultants who work with whistleblowers and their employers say management teams must show they take internal complaints seriously, even if their first instinct is to dismiss them as unimportant or flawed. Among the steps they recommend: allowing employees to report problems anonymously, and following up on reports without trying to identify whistleblowers.

Having third parties run whistleblower hotlines, analyze corporate culture and compensation practices, and survey the satisfaction of employees also helps to avoid getting blindsided.

A spate of recent high-profile whistleblower cases shows many companies still have work to do.

Blood-testing company Theranos downplayed concerns of a whistleblower until The Wall Street Journal reported last year that its tests were flawed. Regulators have since barred it from the blood-testing business for two years.

Fox News recently ousted its CEO and top television host Bill O’Reilly, and has paid millions of dollars in settlements, after years of employees’ sexual harassment complaints. Volkswagen ended up paying more than $20 billion in fines and reparations over rigged emissions tests, something it could have avoided if it had listened to a whistleblower in 2011.

And in the financial industry, Barclays PLC Chief Executive Jes Staley is now being investigated by two UK regulators for inappropriately using a security team to track down a whistleblower.

“In a case where you have a fundamental breakdown in your culture you have you have to have sustained and substantial effort,” said Jordan Thomas, chair of the whistleblower representation practice at Labaton Sucharow. “I would get a baseline survey. I would bring in external people to train the entire workforce. I would then change the way people’s performances are evaluated.”