The Consumer Financial Protection Bureau’s (CFPB) public consumer complaint database constitutes a very real risk to financial services companies that fail to respond appropriately to consumer complaints or that demonstrate a pattern of behavior that the Bureau finds harmful to consumers. As of March 1, 2016, the CFPB had handled approximately 834,400 complaints, according to the Bureau’s March 2016 Complaint Report. Nationally, mortgage-related complaints averaged about 26 percent of all complaints received by the CFPB in February 2016.
Once the CFPB receives a complaint from a consumer, it alerts the financial services company and then awaits a response. As soon as the response is received from the company, or 15 days from the complaint, whichever is sooner, the CFPB publishes the complaint in its online database. In some cases, lenders can resolve consumer complaints before they are published. Even if they cannot, their own statement will be published by the Bureau next to the complaint – if they provide one. Those that fail to respond do not have a voice when the complaint is viewed by the public.
Lenders that learn to mitigate this risk most effectively will have a competitive advantage over those that do not. A great set of first steps is to adopt the following, in some form:
- Make a C-suite executive accountable for monitoring and responding to CFPB complaints. Someone in upper management must own this problem if the institution is to have any hope of mitigating this risk. By making this issue live in the C-suite, it sends a clear message to the rest of the company that this is an important issue.
- Assign someone to listen to and process the consumer’s complaint. When the CFPB sends back word of the consumer complaint there is no consumer to listen to just a record of their complaint. But quite often the company has a chance to address the problem before it gets to CFPB. On the servicing side, this falls to the Single Point of Contact (SPOC). Lenders should also designate trained staff to handle issues that escalate.
- When possible, ask the consumer what an acceptable solution would be. This is not always possible and even when you can ask the question, you can’t always deliver. But the fact is that merely asking the question increases the chance of diffusing the situation and salvaging the relationship. In our highly regulated business, this doesn’t happen often enough, in part because employees are conditioned to expect no deviation from written policies.
- Consider establishing a committee to respond to consumer complaints received by the CFPB. Sending every complaint to the legal department may result in a response designed to limit the institution’s downside risk, but it won’t always provide a real explanation that other consumers who see the complaint can read and understand. It will be obvious that the company is engaging in CYA instead of showing how the event was an isolated occurrence that is not expected to impact other customers. Bringing in some people from the departments in question may provide more satisfying responses and may also open the company up to useful training material that can be used to guard against future problems.
- Finally, don’t ignore your opportunity to respond to the CFPB. You deserve a voice when a consumer complains. Use it to explain your position or apologize for an unfortunate error that you have since taken steps to prevent in the future.