[Update 1: Added clarification from CFPB]

Two leading banking trade groups are not pleased with the Consumer Financial Protection Bureau’s proposal to make public unverified consumer complaints against financial institutions.

The Mortgage Bankers Association and the National Association of Federal Credit Unions say they believe making the CFPB’s consumer complaint database public wouldn’t serve consumers or financial institutions.

Under the CFPB’s proposal, when consumers submit a complaint to the regulatory bureau, they would have the option to share their account of what happened in the CFPB’s public-facing Consumer Complaint Database.

The CFPB says that publishing consumer narratives would provide important context to the complaint and help the public detect specific trends in the market, but Pete Mills, senior vice president of residential policy and member services at the MBA, says it would do just the opposite.

“Adding unverified consumer narrative to the CFPB complaint database will not help consumers select a financial services provider,” Mills told HousingWire. “Would people pay for Angie’s List if they excluded all the positive reviews? Without context, a database full of complaints does not provide useful information to shop for financial services.”

But CFPB Director Richard Cordray thinks the proposal would be “empowering.”

“By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole,” Cordray said in a written release.

The CFPB’s Consumer Complaint Database is the nation’s largest public collection of consumer financial complaints. It includes basic, anonymous, individual-level information about the complaints received, including the date of submission, the consumer’s zip code, the relevant company, the product type, the issue the consumer is complaining about, and the company’s response.

But the problem is these complaints are not vetted or verified, thus the high percentage of baseless complaints or complaints without merit would get equal standing with legitimate complaints, and financial institutions wouldn’t be able to individually address grievances.

“The National Association of Federal Credit Unions [has] strong concerns over the Consumer Financial Protection Bureau’s proposal to publish narratives of the bureau’s consumers complaint database,” said NAFCU Director of Regulatory Affairs Mike Coleman. “Credit unions take great care to address their members' complaints directly and foster ongoing relationships with their members.

“NAFCU has serious concerns about the potential for undue reputation risks to financial institutions relative to unsubstantiated claims. NAFCU will closely examine the proposal and its impact on credit unions, however, at first blush the risks of unwarranted reputational harm to good actors far outweigh any benefits this proposal would create to assist the CFPB to resolve legitimate complaints,” Coleman said.

[Update 1 - 1:32 p.m. ET] 

CFPB spokesperson Moira Vahey said the CFPB will attempt to verify a transaction existed between a complaintant and a company before a complaint is made public.

"Before posting a consumer’s complaint, the CFPB confirms the commercial relationship between the consumer and company. Complaints are listed in the database only after the company responds to the complaint or after it has had the complaint for 15 days, whichever comes first," Vahey said in an email.