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January 31, 2012

NAFCU notes complaint proposal concerns

NAFCU is urging the Consumer Financial Protection Bureau to rework its proposal for disclosing credit card complaints to address financial system-wide reputational risk issues as well as other concerns.

In a Jan. 30 letter to the CFPB, NAFCU President Fred Becker said the association, and the entire credit union industry, supports the proposal's overall goal of investigating legitimate complaints. However, NAFCU wants to ensure that "the system does not unfairly penalize institutions that may be the occasional victim of unwarranted complaints," he wrote.

To that end, NAFCU recommends that the CFPB not requiredisclose of all complaints regardless of merit. Instead, the agency should implement a system that distinguishes between legitimate complaints and baseless complaints that are without merit, and to disclose only those complaints that are justified, Becker said.

"Any release of the raw number of complaints filed against each institution would be misleading and would create reputational risk issues that cannot easily be mitigated,"the NAFCU presidentsaid. "This is all the more true given the publicity that is likely to surround the disclosures and the speed with which even inaccurate viral media spreads."

As written, the current proposal does not take into account "whether the disclosures present a clear and accurate picture of the number of complaints and the institution's response to those complaints," Becker said.

NAFCU also believes that credit unions should not be required to disclose narrative fields for every complaint.

Ultimately, the CFPB's focus on consumer issues should not come at the complete exclusion of system-wide safety and soundness concerns for the financial services industry, Becker concluded. "For this reason, NAFCU is requesting the agency to carefully reconsider its proposed policy."

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