MBA Urges Overhaul of CFPB Complaint Database
The Mortgage Bankers Association said the Consumer Financial Protection Bureau’s consumer complaint and inquiry processes have resulted in “unwarranted regulatory burdens” for many financial services providers and asked the Bureau to develop new processes that properly define “complaints” and encourage consumers to resolve issues with providers before filing complaints.
The MBA letter is the 12th and final response to a series of Bureau Requests for Information initiated by Acting Director Mick Mulvaney to review the Bureau’s processes and operations. This particular RFI asked stakeholders to comment on the Bureau’s consumer complaint and consumer inquiry handling processes.
In the letter, MBA Senior Vice President of Public Policy and Industry Relations Stephen O’Connor stressed MBA members take consumer complaints very seriously. “While generally infrequent, the reality is that mistakes happen. MBA members understand this and have implemented various systems to promptly respond to, and appropriately address, consumer complaints,” he said. “Doing so is a matter of business necessity.”
However, MBA said while it supports the Bureau’s statutory objective to ensure consumers have access to timely and clear information on consumer financial products and services, “in the context of its consumer complaint processes, the Bureau’s pursuit of this objective has resulted in unwarranted regulatory burden for many financial service providers.”
MBA noted during 2017, the Bureau forwarded 31,800 mortgage-related complaints to companies for review and response. More than 80 percent of these complaints were resolved with the company providing a simple explanation.
“These statistics suggest that the overwhelming majority of mortgage-related complaints are the product of misunderstandings rather than company mistakes or instances of wrongdoing,” MBA said. “Given that they were satisfactorily resolved with an explanation, these mortgage-related complaints are much more akin to consumer inquiries. Unfortunately, they are not treated like consumer inquiries. They are classified as complaints and carry all the obvious negative connotations associated with the term ‘complaint.’ They are displayed on the public-facing complaint database alongside valid complaints based on actual regulatory violations.”
Perhaps most concerning, MBA said, these consumer inquiries are included in the Bureau’s periodic reports to the public and factored into lists with titles such as the “Top 10 Most-Complained-About Companies.”
“Treating misunderstandings as complaints is unfair,” MBA said. “It causes unwarranted reputational harm and misleads consumers by dramatically inflating complaint statistics.”
MBA recommended the Bureau develop a process for companies to reclassify consumer submissions to the Bureau’s Complaint Database, saying financial services providers should be able to reclassify a consumer’s submission to ensure it is correctly labeled. MBA noted currently, a complaint remains classified as a complaint regardless of the nature of the underlying issue or its resolution. “The inflexibility of the ‘once a complaint, always a complaint’ policy is inappropriate,” MBA said. “At the time of submission, many consumers simply do not know whether they have a complaint or an inquiry.”
For example, consumers applying for mortgage loans are often surprised by personal, non-financial questions included in the application. MBA members report instances where applicants take offense to questions on race or ethnicity.
“It would not be surprising for such an applicant to access the [Bureau] website and submit a consumer complaint,” MBA said. “The subject company would likely resolve this complaint by explaining that federal law requires mortgage lenders to ask race and ethnicity questions. Clearly, such a complaint is best described as an inquiry. The consumer’s issue stemmed from a misunderstanding and not from the company’s misconduct. It is not fair to treat it as a complaint.”
MBA also recommended the Bureau allow consumers to submit inquiries through its website, noting that the internet has become the primary channel in which consumers and financial services provider interact. MBA added that failing to provide an inquiry option on the Bureau website “needlessly increases” the number of complaints.
MBA also called on the Bureau to encourage consumers to resolved issues directly with the company before submitting a complaint, saying such a policy would reduce the likelihood of a misunderstanding leading to a complaint.
“At minimum, the Bureau should encourage consumers to attempt to resolve the issue with the company. This approach benefits both the consumer and company,” MBA said. “Directly contacting the company provides the consumer with the best chance for a prompt, satisfactory resolution. For similar reasons, financial service providers would also prefer to deal directly with the consumer. Financial service providers care about their customers and want to ‘get it right’ when problems come up. A direct engagement offers the best opportunity do so.”
The letter also reiterates MBA’s call for a thorough re-examination of the Bureau’s operations and practices and references MBA’s white paper, CFPB 2.0: Advancing Consumer Protections (https://www.mba.org/issues/cfpb-20-advancing-consumer-protection), released in September 2017.
