For more than two years now, the Consumer Financial Protection Bureau has been collecting complaint data across several different product areas in financial services including credit cards, mortgages, consumer and student loans, and banking and account servicing. The stated mission of the CFPB is to use this data to educate consumers about their financial providers.
With hundreds of thousands of complaints in the database, lenders need to do more than worry about the impact of the data on regulatory issues. Lenders should leverage the data pertaining to mortgage loans to make adjustments and refine their operations.
For every complaint in its database, the CFPB is tracking whether the customer accepted or disputed the company's response. The CFPB has seen a steady and dramatic decrease in customer-disputed responses from 23% in December 2011 to 10% in March 2013. This decrease includes complaints across the five major product types.
For lenders, this indicates the importance of tracking and documenting customer interactions, including whether the customer accepts the proposed resolution to a complaint. Review customer service scripting to ensure that the proper response is being consistently offered for the common complaint types, as well to reduce disputes.
The CFPB is also tracking complaint response time — that's the time from when a complaint is submitted to when the company responds. An "untimely response" takes more than 60 days. Again, since the database became available, we see a significant decline in untimely responses from over 20% in December 2011 to closer to 10% in March 2013 across all five product areas.
Lenders, among other financial institutions, must know that between the immediacy of social media, and the threat of reports to the CFPB, a timely response to complaints is critical. Even if a lender needs time to figure out the exact solution, communicate early and often with customers to keep them informed of the status of their complaint.
While the CFPB database is valuable for spotting trends and benchmarking consumer issues across institutions, the available data cannot verify whether the CFPB is making a difference in the mortgage industry's approach to service. To provide more transparency into complaints, the agency is considering a policy change that would enable the publication of the narratives, the supporting explanation as stated by the consumer.
There is a great deal of concern in the industry about the proposed rule change to release the consumer narratives. In a public comment submitted during the review period, the Mortgage Bankers Association of Georgia argues that the narratives simply aren't needed. "Social media and other Web-based/online public forums already provide a marketplace of ideas where consumers have and do communicate their experiences," notes J.D. Crowe, president of the MBAG. One company regulated by the CFPB, background screening company GIS, goes so far as to state that there are some cases "where a consumer complaint is not merely incorrect, but is criminally false."
The CFPB has attempted to defuse the controversy by noting, "While there is always a risk that market participants will draw erroneous conclusions from available data, the bureau was persuaded that the marketplace of ideas would be able to determine what the data shows." Several individuals echo this sentiment and make the case for publishing the narratives. One submitter observes, "A consumer can compare statistics on the raw number of complaints and other high-level information, but this kind of data is not very "actionable" in the traditional sense of the term."
Because the narratives are not independently verified, the value is greatly diminished. However, the complaint narratives may help to shed more light on the underlying issues consumers face relative to mortgages and other financial products. Is it the case that consumers just don't understand very complicated financial products? The narratives may help to pinpoint where the communication process has become dysfunctional.
We're seeing a steep and continued drop in both the volume of consumer rebuttals and the time between complaint submission and accepted resolution. These are good signs that lenders are responding more quickly and effectively to resolve customer complaints. Strengthening complaint management processes is an important way for lenders to improve the customer experience. The CFPB database has some inherent weaknesses, but lenders can use the available data to validate internal findings and compare their performance to that of competitors.
