Articles & E-Books


We Don’t Have Any Complaints

Apr 26, 2019

“We don’t have any complaints” is a common response we receive from clients when requesting records related to any verbal or written consumer complaints. However, when talking to front line staff or customer contact staff, we usually learn that the institution has received complaints, but they were treated as customer service matters and were not documented as a complaint. 


For instance, when we ask a loan operations staff member whether a customer has ever come in or called to complain about a loan fee or late charge, we find out they have. When we inquire about how this “complaint” was handled, staff most often respond that they investigated and resolved the matter for the customer either on their own or with the involvement of their manager or the lender. These types of complaints are usually not reported, documented or tracked. 


During interviews with tellers and customer service representatives, we ask if a customer has ever called or come in to complain about a service charge or the fact that interest was not earned, or ATM fees were not refunded on a Rewards checking account, and again, we learn these types of complaints have been received and handled as customer service issues and not tracked as a potential complaint. 


A consumer complaint management program is one of the four control components of a strong Compliance Management System (CMS). This means not only having procedures in place for handling and responding to complaints, but also having a process to document and analyze all complaints received by the financial institution for compliance, fair lending, or potential unfair or deceptive practices implications. 


Most financial institutions have written complaint procedures, but often the definition of what constitutes a complaint is vague and does not include “customer service issues” or is limited to written complaints. 


So, what’s the difference between a complaint and a customer service issue? Essentially, customer service is how an institution handles complaints. A complaint can be defined as any situation that is unsatisfactory to a customer. An unsatisfactory situation is hopefully managed with good customer service.


When a financial institution fails to sufficiently train staff to report all complaints, this is an indicator of a weakness in the institution’s CMS. Without complete complaint data, the Compliance Officer, compliance committee or other management responsible for compliance cannot monitor complaints to ensure they were handled properly and in a timely manner. In addition, there is no data available to analyze for trends that might be indicative of a weakness with a product or service or to identify a fair lending or Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) concern. 


Staff should be trained to report all situations that are unsatisfactory to a customer, even those that are fixed on the spot, such as reporting everything that is not a general statement (e.g., interest rates are too low or too high). This doesn’t mean that every issue must be resolved to the customer’s benefit. Sometimes the response to a complaint may not be what the customer wants to hear.


Reporting complaints is like reporting suspicious activity to the Bank Secrecy Act (BSA) Officer.  It’s important to report all potential complaints, and it’s best to have one primary contact person and a backup person to filter all complaints through.


Complaint records should be analyzed periodically to ensure appropriate action was taken in a timely manner and to identify any trends that may be indicative of broken processes, product weaknesses, issues with a particular staff member, or other areas of concern. Identifying potential issues could head off a written complaint to a regulator, or worse, the public complaint database of the Consumer Financial Protection Bureau (CFPB). Being proactive may prevent the potential for negative news. 


Let’s look at an example to demonstrate a poor complaint management process. A financial institution has several branches and a comparable number of employees to support those locations. A new Rewards checking account product has been offered to customers. Ten different customers go to five different branches and complain to different staff members that their interest was calculated incorrectly or their ATM refunds weren’t received. If staff resolve these issues without reporting them, management may not be aware that there is a potentially systemic problem that needs to be addressed. In order to identify whether there is an incorrect system setting, problem with the settlement process or other issue, management needs to be made aware of the problem before the issue escalates to a more serious level or a potential UDAAP concern. 


If a fair lending, UDAAP or other similar concern is identified during an exam that might have been identified by documenting and tracking consumer complaints, examiners are likely to cite a weakness in the institution’s CMS. This may lead to additional scrutiny of other components of the CMS. 


An institution’s complaint records are reviewed during a fair lending audit or exam, when reviewing an institution’s CMS, and when auditing for potential UDAAP concerns. Documenting complaints, monitoring them, and making changes to products or services as necessary evidences not only the institution’s compliance with these regulations, but also its commitment to preventing consumer harm. 


When documenting complaints, the institution should maintain a record of the following, at a minimum:

  • When the complaint was received
  • What was unsatisfactory to the customer
  • The resolution (satisfactory or not)
  • Who handled the communication with the customer
  • Whether the complaint was related to a specific product, service, employee, law or regulation
  • Timing of the resolution


Rather than looking at complaint management as another burden of compliance, it should be viewed as an opportunity to provide exemplary customer service and a means to track whether the institution’s products and services are functioning the way intended. Good customer service is about maximizing the ability to make the bad things that happen to customers go away quickly. Take credit for it by reporting the complaints the institution receives and how they are resolved.


When an auditor or examiner asks for records related to consumer complaints, an institution should eagerly share documentation of its efforts to resolve its customers’ issues, no matter how small. Examiners would much rather see that an institution is tracking and examining all potential complaints than to hear it has not received any complaints.