The two major credit union trade associations on Monday responded to the latest request for information by the Consumer Financial Protection Bureau, this one regarding CFPB’s processes related to collecting and responding to consumer complaints and inquiries.

Both the Credit Union National Association and the National Association of Federally-Insured Credit Unions asked the CFPB to make significant changes to the bureau’s Consumer Complaint Database, especially in the manner in which complaints are publicized.

Mick Mulvaney, acting CFPB director.
Mick Mulvaney, acting CFPB director. Bloomberg News

For its part, CUNA released a white paper calling for an evaluation of the complaint system, which the trade association contended would lead to a “user-friendly and efficient” process.

“Even though the number of credit union-related complaints is extremely low, to ensure the complaint intake process is effective, we urge the bureau to take steps so that the number of non-substantive and meritless complaints does not increase,” the white paper read in part. “Thus, we urge the bureau to revisit the complaint intake system’s process of filtering out clearly frivolous consumer complaints.”

CUNA further requested the bureau reexamine its marketing of the complaint system. Since most credit unions are not regulated by CFPB, CUNA argued, complaints against credit unions should be directed to NCUA, which has its own processes in place.

“The bureau’s marketing directs consumers to the bureau’s complaint system, which causes confusion and delays in response when those consumers are then redirected to the NCUA and/or the credit union directly,” the white paper said. “The bureau should explore how it can revise its marketing to alleviate consumer confusion and reduce unnecessary correspondence among agencies, institutions and consumers.”

Other recommendations from CUNA included:

  • The CFPB should take appropriate steps to verify the legitimacy and accuracy of a consumer’s complaint and/or compliment prior to public disclosure; and
  • The bureau should explore improvements to the current system, which CUNA believes makes it possible that some institutions are effectively unable to respond to consumers’ narrative description of complaints due to privacy restrictions.

‘Reputational risks involved’

Andrew Morris, regulatory affairs counsel for NAFCU, authored a letter on behalf of the trade group. In this letter, Morris said NAFCU remains “deeply concerned” about the “reputational risks involved with the Bureau's current reporting practices; in particular, the publication of consumer complaints on the agency’s website.”

“NAFCU believes that the Bureau should not publish consumer complaint narratives on its website, or in any other format,” the letter said in part. “There is no shortage of alternative channels through which consumers can comment on or critique the conduct of financial institutions.”

Morris noted Mick Mulvaney, acting director of CFPB, has characterized the Consumer Complaint Database as: “Yelp for financial services sponsored by the federal government.”

“Credit unions already have internal policies and procedures in place to achieve complaint resolution, along with supervisory committees that provide independent and impartial investigations into member complaints,” Morris added.

Morris and NAFCU went on to make several recommendations to improve the complaint routing procedure, starting with suggesting the Bureau officially define a consumer inquiry and require consumers to classify their submission as a complaint or inquiry prior to submission. NAFCU also asserted the Bureau should encourage consumers to first contact their financial institution directly before submitting a complaint through the Bureau’s website.

Other recommendations from NAFCU included:

  • The bureau should remove the Consumer Complaint Database from its public website.
  • The bureau should not publish complaint narratives.
  • The bureau should ensure that received complaints are complete, accurate and routed to financial institutions as quickly as possible.
  • The bureau should take precautionary steps to ensure companies receive consumer inquiries and complaints in a timely fashion, but should not require companies to provide responses to consumer inquiries on a mandated timeline.
  • The bureau should not publish individual consumer inquiries, but should continue to publish responses to frequently asked consumer questions about financial products via "Ask CFPB."

The Morris letter concluded by saying, “Publication of unverified complaint information presents serious reputational risks to credit unions without materially improving consumers’ understanding of the market for financial goods and services.”

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