5 Factors Your Consumer Complaint Management Program Needs to Succeed

Complaint management is an important part of your financial institution's efforts to comply and grow. There are many potential benefits of consumer complaint management, such as more quickly identifying potential issues, building better relationships with consumers, and proactively managing risks. Here are 5 factors that your consumer complaint program needs to succeed.

This week, our Director of Compliance, Kimberly Boatwright, CAMS, CRCM, is speaking at the Indiana Bankers Association’s Mega Conference about how to manage consumer complaints. While some of our Indiana readers may have a chance to see Kimberly in person, readers from other parts of the country might be interested in learning more about consumer complaint management.

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In this post, you’ll learn the 5 factors that every consumer complaints program needs to include in order to help your financial institution stay compliant and grow!

We’ll also talk about how you can build each of these elements, if you don’t already have them. Finally, you’ll get access to a free handout that lists phrases that may signal a complaint.

What is a Consumer Complaint?

A consumer complaint is any written or verbal communication that expresses dissatisfaction with your financial institution’s product(s) and/or service(s).

Here are some additional notes about consumer complaints:

• Complaints can come from customers or non-customers. In addition, complaints may be shared with your financial institution by the consumer, their legal representative(s), or a regulatory agency.

• Whether you believe the complaint to be accurate or justified has little bearing on whether it deserves acknowledgement and response.

• Complaints made by individuals anonymously or by individuals with no previous interaction with your financial institution are unique, and how your institution decides to handle them may vary.

• Certain types of complaints do require special attention. This includes any complaint that alleges discrimination or other Fair Lending (such as ECOA, FHA, HMDA, or CRA), UDAAP, RESPA, FACT ACT violation. These are very serious; how your institution chooses to handle them really matters.

Without further ado, here are the five factors your complaints management program needs to include:

1. Complaint Policy
2. Complaint Management Process/Procedure
3. Clear Responsibilities
4. Training
5. Tracking and Reporting

1. Consumer Complaint Policy

As you consider your complaint management, one of the first things you need to have is a consumer complaint policy. When evaluating your policy, make sure that it:

• Clearly defines a complaint.
• Outlines the different channels or methods you use to accept complaints.
• Details the way your institution handles complaints, and if there are any differences depending on subject matter, loan type, or department involved.
• Explains what constitutes a high-risk complaint.

A high-risk complaint is, generally speaking, 1. any complaint that alleges discrimination or another legal violation, and 2. Any complaint that could hurt the company’s reputation, bottom line, or ability to do business.

If you don’t have a complaint policy in place, it’s important that you take steps to implement one.

2. Complaint Management Processes and Procedures

Your institution should have clear processes and procedures for responding to consumer complaints. This clarity will help everyone inside your company be successful, and it will also limit the potential compliance risks related to subjectivity in handling complaints.

Unfortunately, if poor complaint management intersects with a legitimate risk, you can have real issues. For example, imagine that you have Fair Lending risk exposure in your loan servicing. When the regulators are investigating, they also find that your institution improperly handled, ignored, or didn’t prioritize consumer complaints about servicing. To them, that wouldn’t look good, even if the mistakes were all honest.

As you think about the way your institution accepts, investigates, and responds to complaints, ask:

• Do you have a centralized or decentralized process for handling complaints? A centralized process can provide valuable insights and allow you to spot trends more quickly.

• Who is responsible for gathering, recording, analyzing, and responding to complaints? Is it an independent resource or are they involved in other aspects of the business?

• Who is the owner of resolving the complaint?

• Are response timelines defined?

• Are high-risk or otherwise unique complaints handled differently?

• Are complaints reported to management, and does the Board have insight into the complaints?

• Is there risk of subjectivity or bias in any aspects of the complaint management process?

3. Define Clear Responsibilities

One of the most important factors in successful complaint handling and resolution is having clear responsibilities. The larger your financial institution, the more important this is, because the more complex your process may become. When there is confusion about responsibilities, complaints can slip through the cracks.

When you review your complaints management policies and procedures, try to make sure that you can answer each of the following questions with a specific person’s name or a department, or a clear “yes”:

• Who is responsible for collecting consumer complaints?

• Who is responsible for recording consumer complaints?

• When a complaint is identified, who is notified?

• Who is responsible for resolving complaints?

• Who reports the complaints to leadership?

• Does everyone know when a complaint needs to be escalated, and to whom it should be escalated?

• Are there clear timelines for every phase of the complaint management process? Who is responsible for making sure those timelines are consistently applied?

• Are complaint tracking tools or logs kept up-to-date, and are they easily accessible to everyone involved?

• Are there repercussions for failing to keep up with responsibilities? What are they?

4. Training

Just as with other areas of banking, it’s important to have helpful, informative, regular training on how to accept, process, investigate, and respond to consumer complaints.

Best practices indicate that this training should be provided to all employees soon after they join the company, and periodically thereafter. Whenever there is a change to the policy, all employees should be notified and training updated.

Make sure that all front-line employees are trained on complaint management. They are among the most likely to receive complaints, and so should be the most comfortable with your policies and procedures. The Marketing team may also come across complaints in their brand monitoring, so they should also be well-aware of the complaints management policy.

Many of your employees may desire training tools and other resources to help ensure that they are able to successfully follow your complaint management program. We have created a helpful worksheet that you can share with all employees that lists some trigger phrases that signal a complaint. 

5. Tracking, Trending, and Reporting

One of the best ways to make sure that you’re really harnessing the power of consumer complaints is to provide tracking, trending, and reporting. By tracking, trending, and reporting, you can more quickly identify potential issues with products, services, and unfortunately, even employees.

To have a strong tracking, trending, and reporting process for managing complaints, you need:

• A clear process for where that complaint goes.
• Tracking or reporting with trends being monitored.
• Clear responsibilities for who (or what, if you use a software tool) owns the reporting to management.
• Plans for how to respond to trends identified, such as updates to policy, procedures, and processes.
• Guidelines for management when reviewing and analyzing potential causes and trends.
• Details about if and how long records and reports are maintained.

Read also: 3 Ways to Use Consumer Complaints to Manage Lending Compliance Risk

Ncontracts Viewpoint: A strong complaints management program will ensure that you’re effective, efficient, and compliant in responding to consumer complaints. As you’re working to improve your consumer complaints process, we wish you the best. In the meantime, check out this article listing steps you can take to develop a Community Reinvestment Act (CRA) complaint management program.

We also want to take a quick moment to thank everyone at the IBA for their hard work in making this conference possible. If you're at the conference, make sure that you stop by and say hello!

Want more insights? Check out our whitepaper
Why Complaint Management Matters & How to Get It Right