Complaints: Windows and Doors...

When it comes to complaints, they can be anything from specific allegations to general comments. For exam scoping and ongoing monitoring, examiners will generally focus on complaints dealing with your products and/or services or areas that have the most risk. In other words, they look to complaints considered to be the most “material” or “pertinent” (for example, UDAAP, discrimination claims, federal consumer protection law violations, bank errors, CRA, etc.). Examiners are primarily looking for potential consumer harm. Customers complain when they believe something has gone wrong. Such complaints allow examiners to peek into your product management as well as your awareness of and sensitivity to consumer harm.

For examiners, complaints are a “window” into your institution. They are often an examiner’s only opportunity for direct interaction with your customers and provide a view from an outsider’s perspective. Complaints can help examiners better understand your actual policies, practices, or even a new strategic direction. They can also uncover issues that may otherwise go unnoticed or unidentified.

Complaints and Compliance Risk Management 
Your responsiveness and effectiveness in handling complaints are also of great value to examiners. In fact, the Consumer Compliance Rating System requires a look into complaint resolution. So, how can your CMS reflect an effective complaint program? Be proactive! You, of course, want to fix any issues at hand for a consumer (if possible) – but you also need to determine whether larger-scale changes are appropriate. Obviously, no bank wants their customers to complain, but you can’t control whether they do or not. You do, however, have control over your response.
There are three main elements of an effective complaint program. These include:

  1. Policies and Procedures for defining and identifying complaints.
  2. Thorough and prompt investigation.
  3. Incorporating findings into your Compliance Risk Management Program.
Consider the following in your Complaint Program: 

Define/Identify and Find
You first need to define what you consider to be a complaint. You also need to identify all the different “doors” through which you may receive complaints (customer and non-customer). You should also consider complaints submitted to any third-party service providers. It’s appropriate for your contracts with third-party service providers to outline how your customers should complain and your right to that complaint information so that you can document it. You’ll also want to consider outlining your rights if a service provider isn’t addressing the issue at hand. Remember, the last thing you want is for your customer to feel that you’ve been unresponsive and as a result, they then proceed to notify your regulator or even the media. Complaints are not always prefaced with, “I have a complaint.” For example, they may be in the form of, “I was wondering why I had that fee.” Complaints are often disguised as customer service issues. For example, maybe a customer is disrespected; an employee goes “off-script” and misleads someone; or someone is discouraged from applying for or obtaining a product or service.

Ensure controls 
It’s important to ensure proper escalation of complaints, especially those that may have specific regulatory error resolution requirements. Outline the process for employees to follow and a reasonable response timeframe.

Everyone on your team should understand what to do when they receive a complaint and where to go with it.

Accessibility and accountability allow you to see patterns and monitor the effectiveness of your responses. Consider documenting the following for all complaints: 

Who: Customer information
What: Complaint description 
When: When received 
Where: Branch, office, channel 

Management needs to be made aware of the number and types of complaints received, why they occurred, the risk posed, action plans, and action plan status. 

The following cautions should be considered to assist in developing policies and procedures for handling complaints:
  • Giving too narrow of a definition to “complaint.”
  • Decentralized complaint intake and management.
  • Policies/Practices that facilitate underreporting or discouraging complaints. For example, is there an incentive for branches that don’t receive any complaints in a quarter? This isn’t necessarily good customer service and examiners won’t “honor” a low number of complaints.
  • Improper escalation or multiple referrals.
  • Closing out a complaint without fully understanding the issues/concerns. Consider restating what you feel is the issue in your response or when closing out the complaint to the customer.
  • Making sure response timeframes are appropriate based on the different channels (i.e. doors) through which you can receive a complaint. A faster response is usually expected when communicating electronically. 
  • Some issues require escalation to an attorney to mitigate legal and reputation risk.
Complaints as a Symptom - The “Why’s” 
Effective root cause analysis requires you to ask why and likely more than once. Try asking why at least five times, or until you can’t go any further. For example, say a customer didn’t receive a hold notice and complains about unforeseen overdraft fees. The issue, on the surface, may be resolved by providing a letter of apology and reimbursement for overdraft fees they incurred. However, without the root cause being identified, there’s a high risk that this error will happen again, which will impact more customers.

Look at the “why”:

  1. Teller was told not to give a notice. Why?
  2. Teller was told the Back Office would send it later. Why?
  3. Process Change. Why?
  4. High Volume of Errors noted when given at the teller line. Why?
  5. Ineffective Training. Why?
  6. No Documentation with examples. Why?
Keep going until you can’t go any further. When asking the “why,” you may end up with multiple root causes. Only after you analyze the impact and root causes can you make the best decisions regarding any necessary actions.

So, what complaints should get the most attention? All of them! Even the oddest complaint can be a potential “gem” for compliance risk! Try to see a complaint as an opportunity – to see things from the outside looking in. Complaints can be of great value to:

  1. Your customers (with issue resolution, a high level of satisfaction and feeling valued); and
  2. Your employees/institution (satisfied customers, early detection of potentially bigger issues, and ability to protect the Bank’s “brand,” etc.). In other words, it’s tough to overestimate the usefulness of complaints!
Banker’s Compliance Consulting offers various types of training opportunities so that you get what you want, when you want it, and where you want it. Learn more at