6 Stages of Effective Consumer Complaint Management

  • November 17, 2023
  • Quantivate

If your financial institution is setting up a consumer complaint program from scratch, or you’re being asked to enhance an existing program, it’s important to build capabilities for the complete complaint management lifecycle.

Why is complaint management important?

The benefits of a comprehensive complaint management program aren’t limited to just improving customer satisfaction. Consider that:

  • Examiners assess consumer compliance and the risk of consumer harm by how your institution handles complaints.
  • The information you receive from complaints will help you enhance your overall compliance management system.

The Complaint Management Lifecycle

1. Intake

Ensure that your institution’s definition of a complaint matches the one your examiner uses. The Consumer Financial Protection Bureau (CFPB) defines consumer complaints as “submissions that express dissatisfaction with, or communicate suspicion of wrongful conduct by, an identifiable entity related to a consumer’s personal experience with a financial product or service.”

You don’t want a definition that is narrower than that because you could inadvertently exclude true complaints from your intake system. There should be no expectation that customers or members understand what regulation got violated, or that any regulation got violated, to qualify a conversation as a complaint.

Also ensure that intake processes exist for the various avenues by which your institution can receive a complaint. Complaints can be verbal or from an email, “contact us” form, social media posting, or other written format. They can arrive from a customer, a regulatory body, the Better Business Bureau (or equivalent), or a third party.

Provide sufficient training for all customer-facing staff on the definition of a complaint, the complaint capture system, and the required information for the intake process. For verbal complaints, ensure that customer service representatives know to capture the full complaint, including any trigger words. This isn’t the place to sanitize the customer’s words, as that could mask fair lending issues and/or UDAAPs.

2. Logging

Complaint logging typically involves an online system to capture the elements of the complaint. At a minimum, complaint system data input should include the following:

  • Customer name
  • Account number
  • Type of product
  • Line of business
  • Short description of complaint
  • Text of the complaint
  • Complaint type or intake method
  • Whether the complaint arrived via an examiner or third-party
  • Fields and/or checkboxes to indicate pertinent regulations
  • Trigger language, if applicable
  • Research performed
  • Resolution
  • Whether an error was made by the institution
  • Root cause
  • Restitution provided to customer, if applicable
  • Number of customer communications about the complaint (This is a measure of the efficiency and effectiveness of the complaint program.)
  • Date fields: date received, date opened, date of acknowledgment to customer, date of response, date of closure

Aside from these data points, include any fields that management wishes to report on.

3. Complaint Research and Resolution

Elements of this phase include a well-defined escalation system. For example, a three-level categorization might range from routine complaints at level 1 up to complaints received from a regulator or requiring immediate attention at level 3.

Research should be performed by well-trained staff — perhaps a team — that includes compliance staff.  Institutions that don’t put enough effort into the research and resolution phase often have repeat complaints and/or a higher level of complaints arriving from regulators because customers get frustrated with the institution and seek regulators’ help.

4. Quality Control

A good complaint management program involves quality control over the resolution of the complaint and communication with customers. Part of the process should include an accuracy review before any communication goes out to consumers.

5.  Post-Complaint Actions

Examiners will likely criticize a program that doesn’t include procedures after the complaint response.  Critical elements in the post-complaint phase involve:

  • Conducting a full root cause analysis
  • Determining impact to other customers
  • Updating appropriate processes and procedures

Most importantly, the post-complaint process should involve training to close the feedback loop for staff in the areas where the complaints happened to prevent future issues. Training can leverage the complaint text, research findings, and root cause analysis.

6. Reporting

A comprehensive complaint management program includes reporting to executive management, appropriate compliance and risk committees, and the board of directors on complaint levels, complaint trends, customer harm, restitution, and other important information that stakeholder groups require.

The Takeaway

Financial services firms benefit from operating an effective and efficient complaint management program, not only in improving customer or member service, but also in strengthening their compliance posture. Even small enhancements to complaint data can lead to deeper insights for management about what is or isn’t working effectively at your bank or credit union.

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