Stop the Complaining! How to Establish and Maintain an Effective Consumer Complaint Resolution Process
The Federal Reserve System has instituted formal
procedures for receiving and responding to consumer complaints regarding state
member banks. Consumer complaints about state nonmember banks, national banks,
credit unions, and other financial institutions are referred to the appropriate
This article discusses some of the major consumer
complaints received by the Federal Reserve Bank of Philadelphia during 2001.
The article also provides information that can enhance a bank's complaint
The primary complaints
regarding checking accounts concern (i) increasing the amount of and/or
imposing service charges and overdraft fees and (ii) check truncation policies
- To minimize complaints regarding bank fees and service
charges, it is recommended that changes to charges be mailed promptly to all
depositors and be prominently displayed in the customer service and teller
areas of the bank.
- To reduce check processing and record keeping costs,
some banks have implemented a check truncation policy. Since these policies
represent a major shift in a bank's procedures, it is recommended that any
advertisements or brochures that are used to describe changes to the bank's
policies include a set of detailed instructions for the customer. The
instructions should fully describe the procedures that a customer must follow
in order to obtain copies of paid checks and any fees that may be charged.
The primary consumer complaints
regarding credit cards concern (i) changes in the bank's interest rate, late
fees or other terms and conditions and (ii) lack of adequate or timely
resolution to complaints regarding incorrect charges or other billing
- Typically, as required by Regulation Z, a bank sends a
written notice to consumers detailing changes in the interest rate or terms of
its credit card products. In addition to the required notice, management often
issues a letter explaining any major change(s) to its credit products. It is
recommended that this information be reviewed for accuracy as to the amount of
the increase in the interest rate and the effective date for the change in the
interest rate or other terms. Bank correspondence that is poorly worded or that
lacks key information exposes the institution to legal, reputation, and
- Consumers who contact this Reserve Bank regarding
billing errors related to their credit cards complain about a lack of effective
customer service when attempting to resolve the complaint with their bank. It
is recommended that management review the following items to improve customer
- Ensure that customers are not subjected to
excessive delays when using toll-free numbers.
- Ensure that the bank has effective procedures and
policies to accept, process, respond to, and document consumer calls and
Electronic Fund Transfers
The primary consumer
complaints regarding electronic funds transfers concern (i) incorrect
electronic fund transfers from an account and (ii) computational or bookkeeping
errors by the bank.
Regulation E, which implements the Electronic Funds
Transfer Act, describes specific procedures for resolving errors regarding
electronic funds transfers. Within specific time periods, the bank must
investigate the alleged error and provide notice to the consumer of the results
of the investigation. To comply with the provisions of the act, the following
procedures are recommended:
- Establish specific timeframes for bank employees to
respond to and resolve complaints.
- Maintain ongoing contact with the complainant to report
the status of the investigation.
- Maintain documentation of the analysis, investigation,
and correspondence regarding the complaint.
Complaint Resolution Best Practices
management must continue to develop effective and comprehensive procedures for
accepting, reviewing, and resolving consumer complaints. The following
recommendations and suggestions are offered as best practices to improve a
bank's overall complaint resolution process:
- Identify and assess the legal, compliance, and
reputation risks associated with consumer complaints.
- Develop a self-assessment and review process for the
consumer complaint function that includes:
- Analyzing complaints to obtain information that
will improve customer service or enhance existing policies, procedures, or
- Compiling statistics and other information
regarding complaints by branch office, type, volume, or frequency of
- Utilizing information from complaints to improve
customer service training for departmental or branch office personnel.
- Identifying key bank personnel from the lending,
deposit, and operations departments of the bank who can be contacted to assist
in the resolution of consumer complaints.
- Developing a consolidated approach to the resolution of
consumer complaints that involves a coordinated effort between the legal,
compliance, and operating departments of the bank.
- Developing an ongoing relationship with the primary
bank regulator that includes regular contact with the regulatory staff
responsible for the review and investigation of consumer complaints.
For information regarding the consumer complaint function
at the Federal Reserve Bank of Philadelphia, contact one of the following staff
in the Consumer Compliance and Community Reinvestment Act Examinations
Connie H. Wallgren, Vice President and Chief Examinations Officer
Denise E. Mosley, Consumer Complaint Specialist
The views expressed in this article are those of the author and are not necessarily those of this Reserve Bank or the Federal Reserve System.