CFPB reminds financial services companies on the importance of consumer compliant data – mine your data and everyone else’s!

There will always be complaints about banks and other financial services companies and some of those complaints result in fodder for jokes:

  • If bankers can count, why do they have eight windows and only two tellers?
  • Hospitals report that the hearts of bankers are in strong demand by transplant patients, because they have never been used.
  • If a banker and a lawyer were both drowning and you could only save one, would you go to lunch or read the paper?

The Consumer Financial Protection Bureau (CFPB) does not believe that consumer complaints about a bank, motor vehicle lender, credit card company, mortgage servicer, or other financial services company are a laughing matter. The CFPB noted in their December 2016 Monthly Complaint Report that consumer complaints are an “integral part” of their consumer financial protection work.

The CFPB’s Office of Consumer Response accepts complaints directly from consumers at their online “Submit a Complaint” page, forwards the complaints to the attention of the applicable financial services companies, and assists consumers in getting responses back from companies. The CFPB also publishes a database of non-personal complaint information so the public knows what kinds of complaints have been received by the CFPB and how companies responded to the complaints.

Most financial services companies have developed and maintain robust customer complaint intake, resolution, and response programs. These programs generally handle all forms of customer complaints, whether the complaints are submitted directly from customers or through the CFPB or other regulatory agencies and whether the complaints are considered to be credit reporting disputes under the Fair Credit Reporting Act or qualified written requests, notices of error, or requests for information under the Real Estate Settlement Procedures Act. Most companies also monitor their customer complaint data to identify trends and take corrective actions as needed.

CFPB Director Richard Cordray added an additional burden to most company’s customer complaint monitoring programs. An excerpt from Director Cordray’s prepared remarks at the Mortgage Bankers Association meeting on October 25, 2016 is highlighted below:

While compliance with existing laws and rules is, of course, a baseline expectation for all providers, we believe that the industry can better serve consumers by paying more conscious attention to what those consumers themselves have to say. Addressing their complaints effectively and correcting the processes that give rise to these complaints can make for a more efficient and successful business. I am sure that each of you has your own mechanisms to address complaints and inquiries from consumers, which we consider to be a basic component of any successful compliance management system. This input from your customers merits your most careful attention.

Beyond that, there is much to be learned from the complaints consumers raise about your industry, even if the complaints are not directed to you specifically. And the Bureau has a rich resource at your fingertips in our public Consumer Complaint Database. We have now received more than one million consumer complaints, which we study to prioritize our own supervision and enforcement work. We have published more than 646,000 of them, along with data on company responses. We share this data not only to empower consumers and inform the public, but also so that companies can learn from the data and improve their own operations. By closely analyzing complaint patterns, we can identify spikes in specific complaint types, emerging trends, issues with new and evolving products, and patterns across geographic areas, companies and consumer demographics. We urge you to be doing the same thing, not only with our complaints and the feedback you receive directly from your own customers, but also by reviewing complaints made about others in the same markets. This is data you can use to address current problems and prevent issues from arising in the future. All of this work is an important part of sound compliance management.

Some companies actively monitor news and social media reports about their competitors. This competitive intelligence can provide valuable benefits to a company’s own marketing, sales, customer service, and product development programs. It can also alert companies of competitive threats. The CFPB has indicated that companies should mine more than their own consumer complaint data to gain competitive intelligence.

Based on Director Cordray’s comments above, the CFPB expects companies to analyze consumer complaints submitted through the CFPB’s complaint portal about other companies in their same market area to identify trends in specific complaint types, issues with certain products, and patterns across geographic areas, companies, and consumer demographics. Since “big data” mining now appears to be a required component of compliance management programs, financial services companies should be prepared to prove they are mining, analyzing, and proactively responding to not only their own customer complaints trends, but also to the complaint trends of their competitors. Your customer complaint files and the CFPB’s complaint database are gold mines of information – and your use of this information will – pardon the pun - not be in vein.

A copy of Director Cordray’s prepared remarks at the October 2016 Mortgage Bankers Association meeting is available here.