Contributed by Julie Kappenman, Mountain West Credit Union Association
While receiving consumer complaints is nothing new, how your financial institution is expected to handle those complaints is changing.
It’s easier now than ever for consumers to file complaints. With social media and other technologies, consumers can file a complaint at a click of a button. Not only are the number of ways to file a complaint expanding, the regulatory agencies are asking consumers about their experiences and even providing methods to help consumers file complaints (see, for example, this item from the CFPB posted this week). And while receiving a consumer complaint is not a new phenomenon, the way financial institutions are expected to handle complaints is changing and is now becoming a focus for examiners and regulatory agencies.
An effective complaint management program is a key part of a strong compliance management program. Complaints can uncover a variety of consumer compliance violations as well as policy, procedure and training weaknesses. It is common to look at complaints as a negative, but a financial institution can use complaint trends to detect problems, determine risk levels, and develop strategies. Having a proactive approach to the issues uncovered during the complaint resolution process can improve overall compliance management as well as the examination experience.
One thing to keep in mind when you receive a complaint is that it starts a clock ticking. Complaints submitted to the Consumer Financial Protection Bureau are forwarded to the financial institution, which is required to respond to the CFPB and the consumer within 15 days. The CFPB requires institutions to close all but the most complicated complaints within 60 days. The NCUA recently changed its complaint process to also require credit unions to resolve most consumer complaints within 60 days.
Although there is not a formal law or regulation that requires credit unions to establish a complaint process or program, the NCUA issued guidance to credit unions related to handling consumer complaints in June of 2015. Letter to Credit Unions 15-CU-04, Improving the Process for Consumer Complaints, describes changes NCUA made to streamline its complaint handling process. In addition to providing credit unions with 60 days to resolve most consumer complaints before NCUA’s Consumer Assistance Center intervenes, the letter also recommends that credit unions maintain effective procedures to process consumer complaints as part of their overall compliance management system. The letter contains an enclosure, Responding to Consumer Complaints, which covers specific recommendations for handling consumer complaints. These recommendations include the following eight actions:
Establish channels to receive consumer complaints and inquiries such as telephone numbers or email addresses dedicated to receiving this type of correspondence.
MAKE A PLAN
Establish written policies and procedures to record, categorize, analyze, investigate, resolve and respond to complaints in an appropriate and timely manner.
REVIEW AND UNDERSTAND
Review the complaint and identify all of the issues contained therein.
Determine the appropriate type of investigation of the complaint, such as interviews of the consumer or the credit union employee and review of relevant information, such as the appropriate policies and regulations.
Develop and implement plans to address and correct any illegal or improper practices, if applicable. This may include corrective training and updates of tools and systems.
This means writing to the consumer after completing the investigation of the complaint. The response should address all of the issues raised in the complaint in a precise and clear manner.
Maintain a record of the credit union’s written response and any further communications with the consumer about the matter.
Retain, organize and analyze complaint data to identify and address any trends, areas of risk and program weaknesses.
Developing a strong complaint management program will enhance your financial institution’s overall compliance management program. It will also help you discover weaknesses in compliance before your regulator does. And finally, it will also help to improve products and services to your members, and that is really what credit unions are concerned about, serving their members.
Julie Kappenman is Director of Association Compliance Services for Mountain West Credit Union Association.