How to Comply in the New World of Complaints

NASHVILLE–It’s not enough anymore to receive a member complaint and to respond with just an apology.

Not surprisingly, with Washington now much more involved, member complaints have become a formal process with penalties involved when those complaints aren’t addressed and resolved. 

That has required credit unions to create complaint tracking systems and one CU that has done so shared some of its processes and lessons learned during the NAFCU annual meeting here.

One thing that was clear: complaints are not just what a teller might hear. Complaints can come via numerous channels, including regulators, and can be related to everything from credit reports to RESPA letters to mortgage rules and much more. 
“Complaints run the gamut, but the key is complaint management,” said Mitchell B. Klein, an attorney who is also the chief risk officer with Citadel FCU. “All of these types of complaints need to be managed in some fashion and in a timely way. You don’t want to get in trouble with NCUA or any other agency. You need to be able to show that you responded on a timely basis. Some complaints have response times set by the agency handling the complaint, such as CFPB and the NCUA.”

When a member complaint is filed with a regulator, rules require a credit union to research the issue and answer members within a specific amount of time—with the time limits often varying by rule.

Keep Track

“Keep track of complaints,” urged Klein. “Make sure to adequately address complaints, identify potential problem areas, and stay compliant. It’s a great way to self-assess, and you might find out you’re not compliant with one of the regs.”

Klein made clear that just because a member files a complaint it doesn’t mean the credit union is in the wrong. But it still must research the complaint.  

“Obviously, sometimes, we’re wrong, and we have to admit it and correct it. But we also have to be able to tell the member that either we were wrong or they were wrong and tell them in a polite way. When you look at a complaint, one of the things we try to do as credit unions is make the member happy and give the best service possible. A lot of times you read a complaint and realize that you are right and they don’t have a claim and they are just angry, and you have to tell the member that in a nice way. You have to watch what you say to your members. That’s why all the responses from the credit union come from me. And the person who is answering at the credit union might be angry and that can show in the response.”

Management Solutions

When it comes to tracking and managing complaints, how a credit union handles the issue is often dependent upon its size and complexity.

“There are complaint management solutions out there you can purchase; they are not inexpensive,” said Klein. “If you’re smaller like we are, we use Excel spreadsheets. The number of complaints we get doesn’t merit buying software right now.”

Tracking complaints also mean dedicating someone inside the credit union to handle the process. In Citadel’s case, it uses both a centralized and decentralized approach, with Klein managing the overall process and responsible for much of the interaction and contact with members. An executive assistant is assigned to logging all complaints and monitoring them, but it is often up to various departments to research and address the issue.

“Ultimately, someone has to be responsible for complaint management. (Member contacts) need to be written well and in a way that reflects our values,” he said. “With Excel spreadsheets, you need to use them in combination with Outlook so there are constant reminders for each complaint.

NCUA's Consumer Assistance Center

Klein noted that any complaints that come to the credit union from NCUA must go to the chairman of the supervisory committee, who is responsible for investigating complaints. Complaints to the NCUA are handled by its Consumer Assistance Center, which is now moving everything online to its portal at CreditUnion.gov. Only a CU’s CEO is to access the portal.

In the case of complaints filed with NCUA’s CAC:

• The complaint is received and given case number.
• It is sent to the CEO.
• The member gets an acknowledgment.
• The supervisory committee has 60 days to look into the complaint and respond.
• The response is sent to the member and the CAC is cc’d.
• If resolved, CAC will close the case.
• If no response in 60 days or no resolution, CAC will investigate further, as it will if the member disputes the answer.

There is also an additional investigation phase that can take place.

Five Potential Outcomes

Klein said there are five potential outcomes with complaints filed with NCUA:

1. If the complaint does not include consumer protection laws or regulations that the NCUA does not enforce, it will be dropped by the agency.

2. Credit union resolves the issue and everyone is good, case closed.

3. The complaint is subject to a pending lawsuit, and NCUA will leave it to courts.

4. The complaint did not violate federal laws. Case closed. The complaint did violate federal laws; NCUA launches an investigation.

5. If no one is happy, an appeal is involved, and the NCUA Ombudsman can get involved and seek to find the resolution.

When The CFPB Gets Involved

In cases involving the CFPB, whose oversight is limited to credit unions larger than $10 billion, the agency maintains a consumer complaint database and it allows consumers to file complaints. Consumers can follow the complaint as it is being resolved and comment on the response. All complaints logged into the database are available for viewing by the public.

“What has gotten a lot of complaints is that the CFPB really doesn’t vet what the complaints are, and they get listed on the website, even the smallest complaints with no merit,” observed Klein.

One internal change Citadel has made, said Klein, is in dealing with member complaints that come by phone. He said the credit union’s mortgage servicing department had pointed out that they could often help a member on the phone in 10 minutes, but we were required by previous internal processes to instead send them a letter.

“It was a bad member solution,” said Klein. “We came up with a solution in which I approved overriding of the rules. Now if a member calls, and we resolve it on the phone, we don’t make the member send an error resolution notice. We just log on the account and note what we did.”