Banking in the Ninth

Establishing Effective Consumer Complaint Management Processes

Consumer Affairs Update - April 2018

Kate Loftus | Examiner

Published May 9, 2018

Monitoring consumer complaints can help institutions proactively identify risks of consumer harm, compliance management program deficiencies, and customer service issues. Developing effective complaint management processes and using complaint information to inform the compliance management program can be challenging, however. This article discusses the importance of monitoring and taking action on consumer complaints and highlights effective complaint management processes.

Why is it important to monitor and take appropriate action on complaints?

In general, banks should monitor their complaints to help identify whether their products and services are causing issues for customers and whether their operations and processes are working as intended. Complaints can serve as helpful indicators of possible weaknesses in processes, training, and controls. Banks should also ensure they investigate consumer complaints thoroughly and respond to complainants promptly with the results of those investigations.

The new Federal Financial Institutions Examination Council (FFIEC) interagency consumer compliance rating system addresses effective consumer complaint management as part of the compliance program assessment.1 Examiners evaluate the effectiveness of the bank’s complaint management processes within the context of the bank’s size, complexity, and risk profile. The processes the bank adopts should be appropriate for handling and monitoring the types and volume of complaints received. For example, banks that receive few complaints and have relatively lower-risk products and operations should be able to manage their complaints less formally than institutions with higher-risk products and a larger complaint volume. Within this context, examiners will consider the bank’s policies and processes for overseeing complaints; the quality and timeliness of the bank’s investigations and responses; and the bank’s practices for monitoring complaints to identify risks of potential consumer harm, program deficiencies, and customer service issues and for taking appropriate action on identified risks.

Banks should consider adopting processes such as internal complaint-tracking and analysis practices, regulatory reviews, and complaint-handling procedures that result in consumers receiving prompt and thorough responses.

What are effective complaint management processes?

Banks should consider adopting processes such as internal complaint-tracking and analysis practices, regulatory reviews, and complaint-handling procedures that result in consumers receiving prompt and thorough responses.

Internal Complaint Tracking and Analysis

Banks should consider establishing complaint-tracking mechanisms, which can be organized by risk, business line, or regulation, depending on the bank’s size, complexity and complaint volume. Banks that contract with third parties to interact with their customers should consider requiring those parties to have similar tracking mechanisms, with routine reporting to the bank. A bank can use these mechanisms to help identify issues or weaknesses in its products, processes, or practices that confuse consumers. For example, complaints may indicate that staff members are not following the bank’s established procedures or that the bank needs to expand its audit coverage of a particular function. Analysis of trends and escalation of higher-risk matters, such as when complaints suggest a bank’s product is causing customer confusion, are important components of effective complaint management.

Regulatory Review

Banks should evaluate complaints to ensure the bank is not violating consumer protection laws and regulations, including confirming the bank has not engaged in unfair or deceptive acts or practices (UDAP) or discrimination. Such reviews not only help ensure the bank responds to the complainant’s issue correctly and in accordance with consumer laws and regulations but also serve as an added control enhancing the bank’s efforts to self-identify and correct isolated or systemic violations or issues resulting in consumer harm. To be effective, staff members conducting the reviews should receive appropriate regulatory training in how to determine whether or not a complaint raises any potential regulatory concerns.

Complaint-Handling Procedures

Banks should establish appropriate processes to ensure bank staff responds to consumer complaints timely after completing comprehensive investigations and determining appropriate redress. As noted, these processes should be appropriate for the types and volume of complaints the bank receives. The bank should also provide bank staff with appropriate and effective training on these processes. Prompt and comprehensive responses to complaints demonstrate good customer service on the part of the bank.2


CA Letter 16-8, Uniform Interagency Consumer Compliance Rating System,

Consumer Compliance Outlook, Second Quarter 2012, “Enhancing the Compliance Management Program with Complaint Data,”


1 Consumer Affairs (CA) Letter 16–8, Uniform Interagency Consumer Compliance Rating System,

2 See Banking in the Ninth “Reducing Common Complaints,”