Published March 11, 2013 | March 2013 issue
Federal regulators receive and investigate thousands of consumer complaints against financial institutions annually. The majority of complaints involve checking accounts, credit cards and real estate loans. We discuss the most common complaints and steps that banks can take to reduce their prevalence.
Based on data collected, we can identify common consumer complaints, which we summarize below. (While this information is from publicly available Consumer Financial Protection Bureau data, we find these complaints generally similar to our experience.)
What can banks do to help limit these types of complaints? We recognize that banks already take many steps to anticipate potential concerns of consumers. Bank management understands the many costs associated with dissatisfied consumers. That said, we receive and follow up on relevant consumer complaints as part of our key consumer responsibilities. Based on that experience, we highlight the following steps we believe would reduce the number of complaints.
First, banks should examine the consumer complaints they receive. Banks are in the best position to identify steps they can take to avoid future complaints, recognizing that some complaints may arise given the types of decisions (e.g., denying loans or charging fees) that banks must make.
Second and more generally, banks should evaluate their products, services and practices from the consumer’s perspective. Compliance with consumer protection laws and regulations is no longer just about having accurate disclosures and technically following the rules. Rather, it is also being able to see products and services from the consumer’s perspective to help ensure the bank engages in fair and non-deceptive practices.
Third, we find that many complaints arise out of confusion or misunderstood communication. Again, while some of these complaints may prove unavoidable, banks should ensure they explain fees, terms, rates and billing error practices as clearly as possible. Bank staff should clearly explain product terms and bank processes to consumers at account opening or during loan application processing or loan closing.
Finally, banks should have procedures that ensure bank staff responds to consumer questions and concerns promptly and thoroughly, particularly for serious matters such as foreclosure, billing errors or possible identify theft or fraud. We find that consumers are more likely to lodge a complaint when they believe banks do not take their concerns seriously and respond promptly.
For a more comprehensive discussion of complaints, we suggest a recent Consumer Compliance Outlook article related to complaints and compliance management.