The Route to Real-Time Risk
Customer Management through
BY elizaBeTh clarkson, crcm, cams
What does your bank do with customer com- plaints? Because we all aim to provide excellent service, compliance officers at most banks would probably say they handle them with
a sense of urgency. Why wouldn’t they? Bankers want to keep
existing customers and expand their clientele. If they don’t manage complaints, that can be hard to do.
So, if it seems banks are already on top of complaints, why
are the regulators, especially the Consumer Financial Protection
Bureau (CFPB), so concerned about the banking industry’s han-
dling of customer complaints? The clue is in the phrase “doing,”
rather than “handling.”
While the CFPB and prudential regulators are concerned
consumer complaints are handled appropriately, their bigger
focus is on what banks do with information from reports of
dissatisfaction. It’s not enough that a bank provides a timely
and appropriate response to a complaint; it must also ensure
that someone is looking at the complaint to determine if it was
an isolated service issue or an indication of a bigger problem,
specifically a regulatory violation or an indication of unfair,
deceptive, or abusive acts or practices (UDAAP).
The regulators also want banks to go beyond individual customer complaints and look at customer concerns in aggregate
to determine if there is a trend. For instance, there could have
been several complaints received through various channels, but
they are all related to the same issue.
If all complaints were handled in a decentralized manner, a
trend might never be recognized. No one expects an error-free
environment and perfect compliance all of the time, but there
needs to be a mechanism in place to recognize when an error is
isolated and when there is a bigger issue to be addressed. Enter
the Compliance Management System (CMS), which offers the
ability to identify (and resolve) issues that might be or might
lead to regulatory violations.
Monitoring customer complaints at the individual and aggregate levels will give a bank the power to identify potential
issues. It is real-time risk management. Instead of waiting for
the results of quality-control reviews, compliance monitoring,
or internal audits to know the bank’s state of compliance, closely
monitoring customer complaints can be the canary in the coal
mine. They can give a bank the opportunity to catch problems
in real time and correct them before bigger problems emerge.
But catching problems before they grow is often easier said
than done. How does a bank achieve real-time risk management
through its customer complaint handling and monitoring? It
starts with a formal complaint management program, which is
a required element in any bank’s CMS. A detailed, documented,
socialized program can provide the real-time risk management
every bank needs to have in place. While the complexity of the
program will depend on the size and makeup of the institution,
every bank needs one.
A customer complaint management program should define
how the bank identifies, investigates, and responds to complaints.
It should also track, analyze, report, and take corrective action
when appropriate. To work, the system should include formal
policies that are well documented and communicated across
the company.
elements of Complaint Management
Regardless of bank size, there are key elements or standards of a
complaint management program, which include::
■ ■ definitions: The definition of a customer complaint lies at
the core of a complaint management program, driving what
needs to happen and who needs to be involved in the program. Taking it a step further and defining the program into
levels of risk allows flexibility in how complaints are handled.
For instance, does the bank want every complaint to go to a
centralized area? Or does it just want to focus on certain high-risk or regulatory complaints? Just as important is defining
when a customer or consumer interaction is not a complaint.
Recognizing differences with high-risk complaints, inquiries,
or error-resolution requests, and verbal-versus-written complaints, etc., can help a bank target risk management. It also
allows frontline customer service to avoid getting bogged down
with the complex process of documenting and submitting
every customer inquiry or complaint.
