Grievances and Grumblings: Effectively managing consumer complaints as an elevated compliance requirement

Customer complaints—and customer compliments—have always been valuable sources of feedback, allowing businesses to improve their products and service. With the Consumer Financial Protection Bureau’s emphasis on ensuring that financial service providers respond swiftly and fairly to customer complaints, compliant management has become a more prominent component of every bank’s compliance program.

All federal banking agencies monitor complaints from bank consumers and the public. The Federal Financial Institution Examinations Council’s interagency consumer compliance examination procedures require reviews of banks’ consumer complaint management processes and their complaint records. Similarly, each state banking agency has its own independent process to handle consumer complaints.

Meanwhile, the Electronic Fund Transfers Act (Regulation E) and the Truth in Lending Act (Regulation Z) establish procedures for electronic fund transfer debit card and credit card error resolutions. The Community Reinvestment Act requires pertinent documents to be placed in a bank’s CRA Public File, and those documents may be accessed by anyone requesting the information. The Real Estate Settlement Procedures Act also contains requirements for handling mortgage servicing complaints. Guidelines for other types of complaints received by banks are subject to the FFIEC’s compliance examination guidelines. New regulatory emphasis on violations of the Unfair, Deceptive or Abusive Acts or Practices Act, or UDAAP, highlights the importance of banks resolving consumer complaints.

Today, however, the CFPB has superseding authority to oversee consumer complaints. The bureau’s examination manual asks its examiners to evaluate financial institutions on whether:

The potential for highly visible complaints require your community bank to have a management process that will ensure timeliness, accuracy and consistency in addressing any concerns raised by customers and the public. The following eight best practices will help your community bank develop a timely and consistent complaint resolution and response, and will increase the likelihood that the cause of a problem prompting a complaint is identified and corrected.

Remember that for every person who complains, there can be hundreds who do not but instead are spreading negative, damaging comments to others. Receiving complaints is an opportunity to rectify flaws to prevent future problems.

Mary Thorson  is vice president of Chartwell Compliance, the compliance consulting service provider for ICBA Compliance & Risk Management.

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