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September 29, 2016
NAFCU sees reputational risk in CFPB complaint database updates
NAFCU's Andrew Morris told CFPB Thursday that its proposed Consumer Complaint Database response survey is likely to confuse efforts at complaint resolution and would weaken the effectiveness of financial institution examinations.
"NAFCU is concerned that proposed changes to the [database] would expose credit unions to substantial reputational risk while contributing little to the marketplace of consumer reviews," wrote Morris, NAFCU's regulatory affairs counsel, in a comment letter to CFPB Thursday.
CFPB's proposed update to its consumer complaint database would have consumers fill out a three-question survey about how companies handled complaints; the feedback would be shared with the companies through the Company Portal. The change is anticipated for early 2017.
Morris said CFPB's proposed Company Response Survey functionally resembles existing consumer reporting mechanisms available through social media platforms. Given the availability of those platforms, the bureau's "reluctance to ‘verify all the facts,' and the fact that financial institutions must abide by privacy limits whenever they publicly respond to criticism, NAFCU struggles to see what added value the Survey provides," he wrote.
Consumers usually lodge their complaints with providers before they tell CFPB; Morris said the database would not "adequately capture information about the initial stages of complaint handling." He added that credit unions would likely receive unfavorable survey ratings on the bureau's database and get no credit for earlier efforts at reconciliation.
Morris also pointed out that the survey questions are difficult to contextualize and could lead to confusion. In addition, consumer disclosures of company responses would frustrate the goals of efficient reconciliation. He also noted the potential negative impact on examinations.
"NAFCU and its members believe that formal consideration of subjective variables such as customer dissatisfaction would be counterproductive to the goals of the examination system," he wrote. "By using survey data to inform overall risk assessment, the CFPB would transform examinations into subjective critiques that could potentially overshadow the positive aspects of a credit union's customer service program."
"NAFCU is concerned that proposed changes to the [database] would expose credit unions to substantial reputational risk while contributing little to the marketplace of consumer reviews," wrote Morris, NAFCU's regulatory affairs counsel, in a comment letter to CFPB Thursday.
CFPB's proposed update to its consumer complaint database would have consumers fill out a three-question survey about how companies handled complaints; the feedback would be shared with the companies through the Company Portal. The change is anticipated for early 2017.
Morris said CFPB's proposed Company Response Survey functionally resembles existing consumer reporting mechanisms available through social media platforms. Given the availability of those platforms, the bureau's "reluctance to ‘verify all the facts,' and the fact that financial institutions must abide by privacy limits whenever they publicly respond to criticism, NAFCU struggles to see what added value the Survey provides," he wrote.
Consumers usually lodge their complaints with providers before they tell CFPB; Morris said the database would not "adequately capture information about the initial stages of complaint handling." He added that credit unions would likely receive unfavorable survey ratings on the bureau's database and get no credit for earlier efforts at reconciliation.
Morris also pointed out that the survey questions are difficult to contextualize and could lead to confusion. In addition, consumer disclosures of company responses would frustrate the goals of efficient reconciliation. He also noted the potential negative impact on examinations.
"NAFCU and its members believe that formal consideration of subjective variables such as customer dissatisfaction would be counterproductive to the goals of the examination system," he wrote. "By using survey data to inform overall risk assessment, the CFPB would transform examinations into subjective critiques that could potentially overshadow the positive aspects of a credit union's customer service program."
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