The CFPB’s Mortgage Servicing Examination Procedures, which I wrote about recently, cover lots of interesting topics.  Today, I want to focus on the section of the procedures that deals with a servicer’s consumer complaint handling process. 

The CFPB intends to assess the quality of servicers’ systems for receiving and dealing with complaints, including aspects of customer service phone lines like the ease of getting to a live person, the average hold times, and the abandonment rate of phone calls.  The CFPB also plans to track the average time to respond to complaints, and to examine a sampling of complaints to see how they were resolved.  It even plans to listen to some of the phone calls to hear how the servicer interacts with borrowers. 

One might react to this focus on customer service and complaint-handling with some skepticism, since it is fairly removed from any of the consumer protection laws that the CFPB administers.  But leaving that aside, I think that the emphasis on evaluating these aspects of a servicer’s operations could be very positive for the servicers themselves. 

I’m convinced that customer complaints to regulatory agencies are one of the primary driving forces that may spur a regulatory investigation or enforcement action.  I expect the CFPB to be driven by complaints, much like state AGs and the FTC have been.  That being the case, it follows that one of the best things that any consumer financial services company can do to reduce the risk of incurring the CFPB’s ire is to capture and resolve as many consumer complaints as possible before they make their way to the CFPB or some other regulator.  Viewed in this light, time and money spent on customer service and customer complaint handling is an investment in avoiding regulatory enforcement.  And I think it is generally a wise investment. 

By detailing specific procedures for evaluating mortgage servicers’ customer complaint procedures, the CFPB is adding to the incentives for servicers to examine and enhance those procedures.  In doing so, the CFPB is encouraging complaints and disputes to be resolved long before they can form the foundation for some sort of enforcement proceeding.  It won’t make the same kind of headlines as a big investigation, but this kind of emphasis will help both consumers and servicers in a very real way.