It is no longer enough to have a robust "culture of service" in place to manage consumer complaints. You need a strong complaint management system. Here's why...
The regulators have long held that a strong consumer complaint management program is an important component of your regulatory compliance management system. With the recent CFPB proposal regarding the publishing of consumer narratives, it is more important than ever to have a powerful complaint management program in place.
The CFPB's proposal would allow a consumer narrative to be published publically with the other complaint information that is currently published, at the consumer's discretion.
Consumer Complaint Management Best Practices
"Complaints may be indicative of a compliance weakness in a particular function or department," according to the FDIC. "Therefore, a compliance officer should be aware of the complaints received and act to ensure a timely resolution. A compliance officer should determine the cause of the complaint and take action to improve the institution’s business practices, as appropriate. An institution should also monitor complaints to and/or about third parties that are providing services on behalf of the institution.”
As you assess your consumer complaint management program, note that best practices may include:
Entities should organize, retain, and analyze complaint data to identify trends, isolate areas of risk, and identify program weaknesses in their lines of business and overall CMS.
The CFPB’s proposed policy would allow consumers' narrative descriptions to be published with their complaint. These comments would only be published if the consumer opts in, and financial institutions will have up to 15 days to respond before the comments are published.
The four reasons that the CFPB provides for this change are: 1. It would provide context to the complaint, 2. It could spotlight specific trends, 3. It could help consumers make more informed decisions, and 4. It could inspire institutions to compete based on consumer satisfaction. However, the publication of consumer complaint narratives raises concerns for financial institutions.
Industry publications have commented that adequate protection of their employees is not provided, that the potential for unverified and unsubstantiated data is problematic, and that the companies' response process and timeline should be reconsidered.
"NAFCU has serious concerns about the potential for undue reputation risks to financial institutions relative to unsubstantiated claims," said Mike Coleman, NAFCU Director of Regulatory Affairs.
As we consider how institutions may be affected by the public database, it's important to note that it is similar to social mediums. On social platforms, there is no editing or validation that takes place. With that said, the CFPB will still be confirming that there is relationship between the consumer and the company before posting the complaint.
When we conduct Fair Lending risk assessments, we ask if our clients have any complaints regarding Fair Lending, including any pricing, underwriting, marketing or steering complaints. Complaints are one of the primary trip wires for Fair Lending investigations. Smaller institutions, in particular, rely upon their "culture of service." In today’s world, that reply may not be enough.
Even if you have a "culture of service," you need a proactive complaint management program, proper training, and complaint management, tracking and reporting. There are too many public forums in play today to leave the complaint management aspect of your organization unmanaged! Today, consumers can go to Facebook, Twitter, or Yelp and share their perspective with their world. It looks like they may also head to the CFPB to syndicate their concerns with the public. A "culture of service" alone may not be enough to address the requirements of today's regulatory environment.
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