Written by Haydn J. Richards, jr., as originally published in The Reverse Review.

Consumer complaints: Every financial business has them. Companies try at all costs to ensure that customers are pleased with their business experience and overall customer service so that they can minimize the amount and severity of those complaints. However, executive management of every company should consider what consumer complaints mean and how companies can take advantage of the signals that consumer complaints provide to increase the overall understanding of the company’s business practices and to identify areas in need of improvement.

With the advent of the CFPB and its Consumer Complaint Database, proper management of an entity’s consumer complaint intake is essential. The Consumer Complaint Database provides the CFPB with insight into industry-wide practices and failures, and the CFPB expects that companies will promptly respond to any complaints received. In early April 2014, the bureau issued its annual report on consumer complaints, and its discussion concerning consumer mortgage complaints provides interesting insight concerning certain segments of the industry. For example, of the 59,000 complaints received relating to mortgages, only 1 percent related to reverse mortgage loans. That figure is, more or less, similar to the percentage that the reverse mortgage marketplace comprises within the overall mortgage space. So, reverse mortgages do not appear to cause an overly significant number of consumer complaints. Rather, the figures appear to be in line with what might be expected. In addition, the CFPB noted that the types of complaints made by consumers often involved problems with making payments or a general inability to make payments. So, it can generally be said that the reverse mortgage industry should not face undue scrutiny by the CFPB as a result of consumer complaints, even though the CFPB may have other reasoning for placing heightened scrutiny on the industry as a whole.

Regardless of the fact that reverse mortgages do not appear to be an overly significant source of consumer complaints, companies and their executive management should take the opportunity to re-evaluate their consumer complaint intake and management process.

Here are some things that should be considered:

-Does the company have a person with substantial responsibility accepting consumer complaints and making certain that prompt responses are made to those complaints?

-Does the company have a process in place that acts as a framework for actions relating to consumer complaints?

-When complaints need to be escalated, who handles them?

-Is the company’s legal department involved with the consumer complaint response process?

-Does the legal department ensure that any correspondence delivered to a consumer has been reviewed or, at minimum, that form correspondence has been developed and approved for use?

Having considered the process that your company utilizes in managing its consumer complaint function, executive leadership also should periodically review consumer complaint data for trends. For example, could a review of consumer complaints reveal a global compliance issue that requires correction? In the alternative, could monitoring complaints reveal a business practice that is not consistent with a company’s established procedures? Regularly monitoring complaints for trends will allow a company to understand how it can improve its practices in its operations and its compliance processes.

Periodic monitoring of consumer complaints should not simply result in reports to management. Instead, utilize the receipt of complaints, the correction of those complaints, and the monitoring of complaints for trends as a teaching tool for your mortgage loan originators and other operations personnel. To the extent that executive management educates its workforce at regular intervals in a clear manner, the quality of a company’s originations can only improve, and the likelihood of heightened CFPB or other regulatory scrutiny will lessen. In short, placing appropriate focus on a company’s consumer complaint process and, where necessary, revising and updating those processes to make them current, can better enable a company to navigate operations and compliance challenges.

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