Written by JiJi Bahhur, Director of Regulatory Compliance
It has been a full week since the conclusion of NAFCU’s 2015 Regulatory Compliance School. For those of you who were in attendance, I want to thank you and also commend you for the hard work and effort you put into this very long, but rewarding week. I also want to congratulate the many of you who earned your NAFCU Certified Compliance Officer (NCCO) designation on site or who will do so in the near future.
If you were in attendance at School, you may recall that during the Consumer Financial Protection Bureau (CFPB) Update session, I spoke briefly on the CFPB’s Final Policy Statement regarding disclosure of consumer complaint narrative data. For those of you that did not attend, I’ll brief you now.
Before I jump into the details of this final policy statement, I’d like to start by saying that regulators’ expectations for handling consumer complaints have been increasing, and that trend shows no sign of slowing down. Even though the CFPB only has supervisory authority over credit unions with assets over $10 billion, and therefore the ability to make public only those complaints made on select credit unions, the NCUA could adopt a similar practice down the road. Also, many CFPB enforcement actions and potential rulemakings are generated from consumer complaints.
Under the current practice, when a consumer submits a complaint to the CFPB, neither the consumer’s nor the company’s complaint narrative are made public. Under the final policy statement, disclosure of the consumer’s unstructured complaint narrative data is allowed if the consumer opts-in to having it disclosed publicly. Prior to publishing the narrative, the CFPB will take reasonable steps, according to the final policy statement, to scrub the narrative of information that would make the consumer identifiable.
While investigation and resolution of consumer complaints is ideal, it seems that potential effects from this final policy statement can cause more harm than good. For instance, disclosing narrative data raises safety and soundness concerns and unduly places financial institutions’ reputation at risk. Also, disclosing narrative fields increases the likelihood that personal information will be inadvertently released. Even with the CFPB employing methods to scrub the fields of personally identifiable information, these processes can be imperfect.
For more information on the final policy statement, see NAFCU’s final summary here (NAFCU log-in required). The final rule is effective no earlier than June 24, 2015. In other words, the CFPB will not make public any narratives on the Consumer Complaint Database until at least June 24, 2015.
2015 Regulatory Compliance School Group Photo