Customer complaints – Two simple yet powerful words which should be drivers for action in every Financial Institution.
Recently I attended and event by the Chicagoland Compliance Association where a panel that included representation from each Regulator spoke. One comment from the panel struck a chord as they spoke about customer complaints. This is a risk-based decision every Financial Institution (FI) must make and one that may come at a steep cost. The cost of getting it wrong could be like writing a blank check.
The process of managing customer complaints is a critical piece of an effective overall Compliance Management System. Here are some questions you should be asking:
- Do front-line staff know the difference between an inquiry versus a complaint? If they are aware, who do they notify and how is this escalated?
- There are a variety of methods consumers can communicate with their Financial Institution; are all the channels watched? How are these complaints found and routed to the proper teams for resolution?
- When rolling out a new product or service, is the Financial Institution checking frequent questions about the product or service?
- Is the Financial Institution seeking feedback if there is a lack of interest in the new product or service? If the marketing materials are confusing or worse misleading, this could lead to UDAAP concerns.
- If there is no interest in this product or service, has the FI adequately named the needs of the consumers served? Were staff trained appropriately to communicate the benefits of the new product or service?
- If a FI reports there are no customer complaints, this may trigger a red flag for Examiners as this implies there may not be an effective mechanism in place to gather and document customer complaints.
In viewing the data collected from the CFPB in 2024, there were over two million complaints covering a wide range of products. Accurate credit reporting overwhelmingly led the pack with number of complaints; however, checking and savings accounts also had 52,814 complaints in 2024. Mortgage products had over 21,000 complaints. These are standard product offerings; yet they still create a significant amount of concern from consumers. Financial Institutions could also use this data to evaluate potential risk in service, marketing, management and complaint resolution.
The industry is undergoing a significant period of uncertainty. Uncertainty about what the future holds for all the Federal Agencies, uncertainty about the impact on Regulations, uncertainty about the use of Artificial Intelligence and the impact on our daily lives. However, as the OCC representative mentioned during the panel discussion.
” The core principles of sound banking have not changed.”
Translation: Providing fair access to credit, treating people fairly and following the existing regulations is still necessary. Consumers will continue to hold Financial Institutions responsible for providing quality products and services as well as excellent customer service. An effective process to collect consumer feedback, showing the difference between an inquiry and complaint, escalating to Management to address and resolve these complaints promptly is still critical.
A customer complaint is an early warning detection system to the Financial Institution for potential broader issues which left unchecked or unmonitored may turn into that blank check for a Financial Institution. A blank check they may never have to write, had they put in place the resources, training, and communication to address the consumer’s concern. At the end of the day, providing excellent service is a way to differentiate one Institution from another and ensure a healthy future for the Financial Institution and the communities they serve.
As always, TCA is here to help with A Better Way to answer all your regulatory questions. Contact us at [email protected] or at (800) 934-7347.
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