regulators, state attorneys general, licensing and registration
agencies, and from private or other industry sources. They will
also request bank policies and procedures for receiving, escalating, and resolving complaints along with a list of complaints
received for a specific period of time. The complaints will be
reviewed to identify those alleging deception, unfair treatment,
unlawful discrimination, significant consumer injury, violation
of law/regulation, and whether the complaints were handled
timely, satisfactorily, and whether timely prospective or corrective actions were taken. If the bank works with third party
service providers or other parties referring business to the bank,
the Bureau expects the bank to ensure prompt and appropriate handling of service provider related complaints. Lastly, as
with other elements of the compliance management system, the
Bureau expects that analysis of consumer complaints and resulting changes to policies, procedures, training, and monitoring
are reported to senior management and the board of directors
enabling timely and meaningful oversight.
#6
Policies and procedures are only part of the equation. A robust
training program is needed to ensure the policies and procedures
are properly implemented and are operating as intended. Monitoring performance against the policies and procedures will help
to ensure the effectiveness of the training program and identify
any required revisions and reinforcements. Training that helps
employees understand how their performance affects customer
satisfaction—whether through operational execution, service orientation, or regulatory focus—should make the exercise more
meaningful and memorable. It will also empower front line employees to resolve complaints at the first point of contact thereby
limiting the escalation process which can sometimes lead to a
more frustrated customer.
#7
The business of banking is constantly evolving. Whether it is new
products, new services, new technologies, new regulations, new
customer expectations/attitudes, the programs in place at your
bank will require periodic updates and enhancements if they
are to keep up with the evolution of the business. The complaint
management program is no different. There are various sources
of information that will yield improvements to the program
including your bank’s experiences, industry complaint analysis,
and input from regulatory agencies. One additional input may be
from your internal audit function. As they audit the complaint
management program they may provide recommendations
to enhance the efficiency and effectiveness of the program in
handling customer complaints, ensuring the program addresses
applicable regulatory requirements and meets the Bureau’s or
your primary regulator’s expectation of a consumer complaint
response program.
Pending Bureau Proposal
Banks need to pay attention to pending regulatory changes that
could affect the complaint management process. On May 5, 2016,
subsequent to a study on the use of mandatory arbitration clauses
in contracts for consumer financial products or services, the Bureau
issued proposed rules prohibiting clauses that prevent consumers from filing or participating in class-action litigation. These
clauses have typically appeared in contracts for credit cards and
bank accounts among other financial products. According to the
Bureau press release, “These clauses typically state that either the
company or the consumer can require that disputes between them
be resolved by privately appointed individuals (arbitrators) except
for cases brought in small claims court. Where these clauses exist,
either side can generally block lawsuits from proceeding in court.
These clauses also typically bar consumers from bringing group
claims through the arbitration process.
As a result, no matter how many consumers are injured by the
same conduct, consumers must proceed to resolve their claims
individually against the company.” The proposed rule would allow consumers to file class action lawsuits or join a class action
filed by someone else. Although arbitration clauses would still be
allowed in contracts, they would have to explicitly state that they
cannot be used to stop a consumer from being a part of a class
action suit. The proposal provides specific language that banks
must use. While release of the final rule is still pending and is
anticipated in early 2017, the proposal is a clear indication of the
direction the Bureau is taking and it certainly highlights the need
for a robust consumer complaint management program that not
only addresses individual customer complaints, but also deters
similar complaints that could give rise to class action litigation.
While staying out of regulatory hot water and class action litigation
is an incentive, understanding and managing consumer complaints
is imperative in meeting strategic business objectives, customer retention, and profitability. In financial services, as in most consumer
service fields, complaints offer valuable information that can inform
a bank about how well it provides its services and products to its
customers. While complaints are never desired, they do happen.
When complaints happen, they provide an opportunity to correct a
problem, improve a product, or make sure that communications with
customers are clear whether in person or through advertising and
marketing messages. A customer that complains does not need to be
a dissatisfied customer. A bank can recover from misunderstandings
or mistakes and in the process turn an unhappy customer into a loyal
customer and at the same time meet its regulatory obligations. ■
ABOUT THE AUTHOR
LIZA WARNER, CPA, CFSA, CRMA, is a managing director at
CrossCheck Compliance. She is a bank compliance and risk
management executive with over 30 years of experience in the
financial and professional services industries. Previously Liza
was the chief compliance and operational risk officer for a $29
billion bank holding company, where she was responsible for
the management of the regulatory compliance and operational
risk management programs. Liza can be reached at lwarner@
crosscheckcompliance.com.
