While it initially sparked major concern among lenders, the decision by the Consumer Financial Protection Bureau to publicize consumer complaints may be less of hot button issue—for now.
The CFPB initially stated in 2012 it would make consumer complaints regarding financial topics—mortgages included—public through an online database. Yet those complaints, collected by the bureau, would not be validated before publication. In other words, there are complaints made public including lender name and nature of the complaint, yet not actually proven or verified beyond a check to confirm communication between the complaining party and the institution that is the subject of the complaint, according to the CFPB.
Having gone public in April, however, the complaints only provide very general information rather than specific information about the consumers’ dissatisfaction.
“It’s vague at best,” says Chris Willis, partner with Ballard Spahr LLP. “It’s not all that detailed.”
The complaint portal specifies the lender’s name and complaint type along with whether the complaint has been resolved. Some lenders even made headlines following the release of the database for their high percentage of complaints resolved, including Bank of America.
Reverse mortgage lenders, which received 272 complaints, or .5% of the total number of mortgage complaints collected thus far, may be best served by addressing any complaints upfront so they don’t end up in the database.
“We employ a formalized complaint process that includes initial acknowledgement of a consumer’s complaint, investigation of the complaint, and a full response explaining our actions or corrective measures,” says Bill Trask, executive vice president and chief counsel for Security One Lending. “Every complaint runs through this process. Because of this process, rarely would a consumer have reason to report a complaint against us to the Bureau.”
Whether large or small, companies should be mindful of the complaints they receive and addressing them in a timely mannerso that they do not go to the complaint database, Willis agrees.
“The takeaway for lenders is you need to have good control over your complaints to prevent them from showing up on a report like this,” he says. “People are going to draw conclusions rightly or wrongly.”
Internal complaint controls may also serve companies by helping them not to end up in further CFPB examinations, which the agency has said will be a measure leading to deeper examinations of financial services companies.
“[There is some concern] about how the Bureau will use even resolved complaints in its pre-examination risk analysis of lenders,” Trask says. “I understand from the Bureau’s publications that borrower complaints will play a major role in determining higher risk lenders that will undergo a much deeper examination.
Written by Elizabeth Ecker