Customer Complaints- Manage Them or the Whole World Will Know!

Customer Complaints are a Part of the Dodd Frank Act:

As many of us are well aware, the Dodd Frank Financial Regulation Act (“Dodd Frank” or the “Act”) introduced sweeping changes to bank regulation.  Many provisions of Dodd Frank were implemented immediately and are at this point well known.  However, there are several provisions that have either not yet been enacted or are less well known.  Among the less well known provisions is section 1034 of the Act.  This section directs the Consumer Financial Protection Bureau (“CFPB”) to develop a national complaint system.  The system is designed to track both the complaints of consumers that use financial products and the responses of the institutions that offer the products.  The compliant system first went live in 2011 when only complaints about credit cards were accepted.  Since that time, the CFPB has taken complaints about mortgages, bank accounts and services, private student loans, other consumer loans credit reporting, money transfers, debt collection and payday loans.

Did you know that the complaints that are made against you can be made public?   As of July of 2015, not only will complaints be public, but the narrative of the complaint can also be published at the customer’s request! While many of the lobbying groups for banks have found this last part abhorrent, we believe that this practice creates an opportunity for improvement.

The complaint process:

The complaint process is described in the Company Portal Manual that was released by the CFPB in 2011.  The basic process is as follows:

  1. Consumer submits a complaint by web, telephone, mail, or fax to the CFPB, or another agency forwards the complaint to the CFPB.
  2. Consumer Response reviews the complaint for completeness and consistency with [1] our authority and roll out schedule.
  3. Consumer Response forwards the complaint to the company identified by the consumer via the secure company portal (portal). The goal is to route complaints within 24-48 hours of receipt.
  4. Company [2] reviews the complaint, communicates with consumer as appropriate, and determines its response and any related actions.
  5. Company responds to Consumer Response via the portal.
  6. Consumer Response invites the consumer to review and evaluate the company’s response by logging into the secure consumer portal or calling the CFPB’s toll-free number. [3]
  7. Consumer Response prioritizes for investigation complaints where the company failed to respond within the requested timeframe or the company’s response is disputed by the consumer[4]

For banks and financial institutions, it is very important to respond in a complete and timely manner to complaints.  The CFPB’s system will track complaints and will show response times as past due in the event that a complete response is not received.  Make sure that your institutions complaint response policies and procedures are up to date!

When a response is a response

The requirements for a proper response are described in the guidance that was published in June 2013.  The guidance notes that is always up to the institution to decide how best to respond to the customer.  However, it is clear that any response is expected to be completely documented.   For example, if a complaint is about a credit card closing, the documentation that is expected includes the following:

Account closings:

  • Adverse Action notice, including the reasons for the adverse action *
  • Date the account was closed
  • Date the notice was sent to the customer
  • Whether notice sent by postal mail or electronically
  • If sent by postal mail, the address to which the statement (or notification, as applicable) was sent[5]

It is likely that a response that does not include all of this information will result in additional inquiries from the CFPB.  The more complete the document that is relied upon for the response, the better.

Your Complaint may become public  

As of July 2015, the CFPB has decided that the narratives from the customer’s complaints can be made public if the customer consents.  Financial institutions can also ask that their responses also be made public.  Many groups, including the American Bankers Association, expressed grave concerns about the potential for reputation harm based upon the publication of complaints.  Nevertheless, the CFPB determined that the public good was better served by allowing consumers the option to publish their complaints.[6]  The possibility that a complaint against your bank may be published means that your procedures for responding are of critical importance.  Documentation of the reasons for the response should be complete and accurate.  Remember, there will be a possibility that the whole world will see!

Turning a negative into a positive:

The good news in all of this is that one institution’s pain is another’s opportunity for growth!   The results of complaints are published on both an annual and a monthly basis.  This is YOUR opportunity!       Find out what the complaints are and treat each one like an opportunity.   If you note that complaints about debt collection are the most prominent, it will be a good idea to review your banks procedures for debt collection.   Has your bank incorporated the most recent rules and guidance in this area of your practices?  If you are using a vendor, have you completed due diligence of the vendor recently?

The CFPB has made it clear that they are reviewing complaints, compiling the results and directing resources to the areas that experience the highest level of complaints.  The complaint system will be a good barometer for determining the areas of emphasis for examinations in the near future.

[1] The “our” in this quote refers to the CFPB

[2] “Company refers to the institutions who will use the reporting system

[4] CFPB Company portal manual

[5] CFPB  Response Guidance July 2013

[6] Note:  Only “verified” complaints can be made public-there has to be a relationship with the person complaining and a valid basis for the complaint.

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