The Federal Credit Union September-October 2013 - (Page 44)

ComplianCe Central Managing Member Complaints: An Effective Tool for Managing Reputation Risk By Bernadette Clair E xcellent member service is one of the hallmarks of the credit union industry, due in no small part to its member-owned cooperative nature. Even with this strong member-oriented foundation, now more than ever, effective complaint management is becoming indispensable. Regulators are increasing their focus on consumer complaints. Consumer expectations are rising, and they’re using media to spread the word — good and bad — about their experiences with their financial institutions. Credit unions must be mindful of complaints, in whatever form they appear. Complaints from members can come through many channels, including verbal complaints at the teller line, written complaints sent to the credit union, Facebook posts and formal complaints submitted to the National Credit Union Administration (NCUA). Credit unions are expected to have procedures in place for handling specific types of complaints, such as Regulation E’s error resolution requirements for electronic fund transfer (EFT) errors or formal complaints submitted to the NCUA (or appropriate state supervisory authority for state-chartered credit unions), to which a federal credit union’s supervisory committee must respond. However, informal complaints tend to be handled on an ad hoc basis, and the credit union may not be getting a complete picture of all the member complaints it receives. This leaves useful information on the table — information that could be used to determine if there 44 are patterns or trends that point to reputation risk issues, such as compliance deficiencies or poor member service. Putting a process in place to manage member complaints, in whatever form they are received, can be an effective tool for establishing and maintaining your credit union’s reputation as an institution that complies with consumer protection law and is responsive to its members’ needs. Some benefits include enhancing member service, keeping tabs on the effectiveness of the credit union’s compliance program and internal controls, and finding and correcting potential issues before an exam. Increasing Regulator Focus on Consumer Complaints Regulators’ expectations for handling consumer complaints have been steadily increasing, and that trend shows no signs of slowing down. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which created the Consumer Financial Protection Bureau (CFPB), established a statutory mandate directing the CFPB to collect, investigate, and respond to consumer complaints. The CFPB has wasted little time and now handles consumer complaints on credit cards, mortgages, bank accounts or services, private student loans, consumer loans, credit reporting and money transfers. The CFPB also established a public consumer complaint database, which now holds thousands of complaints. One criticism of this database is the CFPB does not verify the legitimacy of the complaints, leaving institutions vulnerable to potentially unfounded complaints that could harm their reputation. Although most complaints against federal credit unions will be forwarded to the NCUA for resolution and will not be available in the public database — because the database is limited to complaints against institutions with more than $10 billion in assets that are directly supervised by the CFPB — publicly disclosing unverified complaints distorts consumer perception of financial institutions and their compliance with consumer protection laws. NCUA has raised the profile of member complaint resolution as well, approving the creation of the Office of Consumer Protection (OCP), which became fully functional in 2010. The OCP consists of two divisions — the Division of Consumer Compliance and Outreach (CCO) and the Division of Consumer Access (CA), which handle consumer protection and charter programs and policies, respectively. Responsibilities of the CCO include processing member complaints filed against federal credit unions in a centralized, consistent manner, as well as serving as an interagency liaison on consumer protection and compliance issues. Benefits of Comprehensive Complaint Management Expanding complaint management beyond the bare minimum can be an effective risk management tool. Determining the channels through which the credit union receives complaints, the types The Federal CrediT Union September–OctOber 2013

Table of Contents for the Digital Edition of The Federal Credit Union September-October 2013

Voices & Opinions
Fromt the Chair
Inside NAFCU
Technology Today
What You Need to Know Now About EMV
core Competency
In Case of Emergency
Delivering for Dealers
Getting to Know...
Management Insight
Compliance Central
Inside NAFCU Services
From the President's Desk

The Federal Credit Union September-October 2013