WASHINGTON — The Consumer Financial Protection Bureau on Thursday finalized a controversial policy allowing consumers to describe their banking experiences more fully on the agency's complaint portal.
The financial services industry strongly pushed back on the CFPB's July proposal to expand its online complaint system. Initially, the portal only included the name of an institution and the product targeted in the complaint, but under the new policy people can choose to publicize the "narrative" of what allegedly happened.
While FIs have argued the expansion will allow unverified details to be posted to the public, the final policy was largely unchanged from the proposal. However, a consumer will have to affirmatively "opt in" to providing a narrative before it is included in the portal, and companies will have time to respond to the complaint before it is published.
The agency says publishing the longer narratives will help provide context around complaints and assist the CFPB in monitoring trends in the financial marketplace.
"Consumer narratives shed light on the full consumer perspective behind a complaint," CFPB Director Richard Cordray said in a press release. "Narratives humanize the problems consumers face in the marketplace. Today's policy will serve to empower consumers by helping them make informed decisions and helping track trends in the consumer financial market."
The CFPB did try to address uneasiness expressed by the financial services industry by seeking public comments on how it could also highlight positive experiences, whether through the complaint portal or a separate system. The agency also said it will not publish any of the narratives for at least 90 days from when the final policy is included in the Federal Register "in order for companies to learn about this new system." Consumers could begin opting in to provide narratives as early as Thursday.
Yet those steps are unlikely to satisfy the industry's overarching concerns about the publicized narratives.
Luke Martone, CUNA's senior director of advocacy and counsel, said the trade association, "Supports the ability of consumers to access timely and clear information on consumer financial products and services."
"Because credit unions are member-owned financial cooperatives, it is not surprising that so far there have not been a sizable number of complaints filed with the CFPB," Martone said. "However, as detailed in a Sept. 22, 2014, letter to the Bureau, we have serious concerns with the quality and usefulness of narrative data submitted to the CFPB's consumer complaint database."
Martone said CUNA is still reviewing the final policy, adding, "We appreciate that the Bureau has addressed some concerns raised by CUNA and others, such as creating a list of optional structured responses that companies can use to respond to consumer narratives. However, a major issue that does not appear to be rectified in the final policy relates to the Bureau's process of verifying the legitimacy and accuracy of narrative complaint information."
Alicia Nealon, director of regulatory affairs for the National Association of Federal Credit Unions, said NAFCU believes the change by CFPB has the potential to “unnecessarily increase” reputational risk to credit unions.
“Credit unions already take great care in resolving their members’ complaints directly,” said Nealon. “NAFCU, however, is concerned that this new policy may allow unsubstantiated information into the complaint resolution process. We believe such incomplete and unsubstantiated information will not only create an inaccurate picture of an institution, but it will also make the complaint process more complicated and confusing for consumers and institutions.”
Richard Hunt, president and chief executive of the Consumer Bankers Association, said, "While we support the bureau's collection of complaint data to identify trends and understand consumer concerns, we are disappointed by today's decision."
Hunt suggested the agency could substantiate complaints before posting them, but is not choosing to do so.
"The CFPB has the ability to demonstrate trends, allow for an appeals process, and normalize data — much like other regulators," he said. "Puzzlingly, they choose not to use any of these illuminating mechanisms. Today's action does not reflect the principles of accountability, transparency, and data-driven decision making which the bureau professes guides its work. This agency can do better."
The CFPB said as part of the new policy it will not publicize the consumer narrative until companies have had 60 calendar days to offer a complaint response. Also, the consumer complaint narrative must meet certain criteria to be published such as the consumer must have a confirmed relationship with the named company, the complaint is not a duplicate and it must be submitted through the CFPB's website.
The criteria is similar to how the current system works, which gives companies 15 days to respond to the brief complaint before it is published in the database online. Consumers already can submit a narrative to the CFPB privately but the main difference in the new policy is that they can now "opt in" to have that narrative publicized. Consumers also can opt out if they want to remove the narrative at any time afterward.
The CFPB emphasized the policy does not undermine safeguards to protect a consumer's identity, which was another concern raised by the industry.
"The bureau will take reasonable steps to remove personal information from the complaint to minimize the risk of re-identification," the CFPB said in its press release. "This means the CFPB will use a thorough process to ensure complaints are scrubbed of information such as names, telephone numbers, account numbers, Social Security numbers, and other direct identifiers."
The policy includes a list of formatted public responses that the company can chose from when answering a complaint.
"Companies will be under no obligation to offer a public response, and they have 180 days after the consumer complaint is routed to them to select the optional, public response," the CFPB said. "Companies will have the option to address all consumer complaints submitted after this policy announcement, not just those where a consumer consented to publication."
The CFPB currently accepts complaints about mortgages, credit cards, consumer loans, debt collection, credit reporting and payday loans. The agency has received about 558,800 complaints as of March 1. Mortgages and debt collection are the most common complaints, the agency said.
As for steps on how to publish positive consumer feedback, the CFPB said it is considering two options: either to provide more information on how companies handled complaints — including when a bank's response was seen as satisfactory — or provide consumer compliments independent of the complaint process.
"Today's RFI [Request for Information] seeks input on these options and welcomes other ideas," the CFPB said.
Michael Bartlett contributed to this report.