In the first blog of this series, we noted that managing complaints is a regulatory obligation for most financial institutions. So, what are the components of a complete complaint system?
A comprehensive complaint program generally includes five key components:
- Written Policies and Procedures
- A System for Collecting and Tracking Complaints
- A System for Classifying Complaints
- A System for Addressing Complaints
- A System for Analyzing Aggregate Complaint Data
Written Procedures
For any financial institution, a written policy establishes what will be considered a complaint, where complaints will be collected, and how they will be resolved. Although there’s no specific regulatory definition of a complaint, it’s important that the policy doesn’t restrict the definition too narrowly. Regulations like UDAAP can be far-reaching and apply in unexpected situations. As a best practice, your institution’s definition of an official complaint should be broad.
System for Collecting and Tracking Complaints
While there’s no regulatory requirement for how complaints should be collected, it’s crucial that complaints are gathered and tracked in a centralized manner. A centralized system ensures that all complaints are reviewed and resolved. By using such a system, an institution can route complaints to the appropriate department with expertise to address them effectively.
Classifying Complaints
Not all complaints are the same. Many are individual and specific to the customer, while others may reveal systemic issues like accounting errors, improper disclosures, or missing information. A system for classifying complaints helps track complaint types and ensures that serious issues, such as allegations of discrimination or illegal activity, are escalated to senior management. This system can also help identify frivolous complaints. The response method and timeframe should be aligned with the complaint’s classification.
System for Addressing Complaints
A comprehensive system for addressing complaints should consider the root cause of each issue, as this can highlight potential systemic problems. Many customers don’t bother to complain and may simply switch to a competitor. Additionally, a single complaint may require multiple actions to fully address it. For instance, an improperly credited account may necessitate both reimbursement to the customer and a refund of any charges or fees. The complaint system should ensure that all issues raised are resolved.
Analyzing Aggregate Data
A single complaint may not indicate a significant concern. However, analyzing aggregated complaint data allows financial institutions to gain a clearer view of customer sentiment. Sometimes, complaints don’t require specific responses but can still be instructive. For example, a complaint about fees for a particular service may suggest that competitors are gaining an advantage by offering a different fee structure.
With a comprehensive complaint system that includes each of these five components, a financial institution can gain valuable insights while meeting customer needs effectively.
4o