Magazine article Independent Banker

Why You Don't Need to Dread Complaints

Magazine article Independent Banker

Why You Don't Need to Dread Complaints

Article excerpt

What is a complaint? If you ask Merriam-Webster, you will find a familiar preponderance of negative terms such as "expression of grief, pain, or dissatisfaction," "something that is the cause or subject of protest or outcry." But from a bank compliance perspective, complaints are more than that.

Many financial institutions use complaint data in a limited way, by performing the perfunctory resolution process and tracking and reporting merely the complaint volumes. However, complaint data are a treasure trove of feedback about internal controls and potential regulatory risk, and a glimpse into the minds of customers.

"Banks that can get really good at capturing all of the written and verbal complaint data available, conducting solid trend analysis and translating it into actions to improve their compliance management system and business practices reap the greatest benefits," notes Barbara Boccia, a senior director who manages the advisory services and regulatory relations team at Wolters Kluwer.

Why actively manage complaints? "First, they are a priority of the bank regulatory agencies," says Boccia. "There is no better evidence of that than the Consumer Financial Protection Bureau's [CFPB] detailed system to capture, track and report on complaints. The CFPB is conducting trend analysis ongoing and year over year, and the analyses help inform and drive the priorities for the regulators in terms of what is coming in examination and supervision focus, and in future regulatory changes."

Compliance examination guidance offers insight into the value of the consumer complaint and inquiry process. It emphasizes that an effective compliance management system (CMS) includes a responsive and responsible process for handling consumer complaints and inquiries. Regulatory agencies expect the intelligence gathered from consumer complaints to be organized, retained and used as part of an institution's CMS.

A quick look at the examination procedures reveals that every aspect of the regulators' evaluation of a bank's CMS is at least in part evaluated from the financial institution's ability to effectively manage the complaint process, including data from third-party vendors. Complaints received by or through third parties for accounts, products or practices conducted for or provided on behalf of a financial institution are the responsibility of the financial institution.

The bigger picture

Another good reason to be proactive about tracking and managing complaints is that it just makes good business sense. "Sometimes we get caught up in the compliance silo of meeting regulatory process technicalities, and we miss the bigger picture of the internal strategic value," says Boccia. "It's important for each community bank to come back to its core strategy and to integrate compliance throughout the institution at every level, as opposed to treating compliance as a separate dynamic.

"Complaint management really is the business of everyone in the organization and facilitated by the compliance officer, from the top to the bottom, throughout every department," she continues. "A community bank's business is based on interaction with consumers and small businesses, and its basic core strategy is to attend to those customers' needs. Paying attention to the feedback they are giving you, which might likely come in the form of a complaint, just makes good business sense. …

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