Garnet Capital Advisors Blog

While the original database has been found useful by many consumers, they did not have the option of providing extra details about their situation. Basically the database noted the complaint category, the complainant's zip code, and a brief description of whether the financial services company resolved the problem.

So far, the CFPB has received 558,000 complaints, most of which have to do with mortgages and debt collection. In 2013, over three-quarters of complaints were closed via explanation or clarification to the consumer, and only 2% of cases in the database were closed with monetary relief to the consumer. The CFPB has recently added features to the database they say will make the tool more useful to consumers, but financial services groups aren't so sure.

What's New

Starting in mid-March, consumers gained the option to include a public narrative explaining their specific problem with a financial product. The CFPB scrubs the narratives of identifying information and confirms beforehand that the consumer had a relationship with the company about which he or she wanted to lodge a complaint. After a consumer files a complaint on the database, companies are expected to respond within 15 days and close most complaints within 60 days.

The companies targeted by the complaints are identified, and they too can share a public response, though their responses are in the form of pre-set, categorical information rather than a narrative explanation. Companies targeted by complaints may state that they dispute the facts the consumer presents, they believe the complaint was the result of an isolated error, or that they addressed the complaint appropriately. Companies also have the option to not make a public response.

Though consumers have been able to include narratives in their complaints since March 19, you won't see them on the website for at least 90 days, to give financial services companies sufficient time to prepare for the change.

Why Consumer Advocates Like the Changes

Richard Cordray, CFPB Director, says that the addition to the complaint system will give a fuller story of the difficulties consumers face with financial services and will "humanize" the problems consumers deal with. Says Cordray, "Today's policy will serve to empower consumers by helping them make informed decisions and helping track trends in the consumer financial market."

The National Fair Housing Alliance is also in favor of the changes, but believes it doesn't go far enough in providing demographic information that could indicate discriminatory practices. Shanna Smith, president and CEO of the National Fair Housing Alliance, says, "Today's announcement from the CFPB is a good step forward in helping shed light on the bad treatment we have seen disproportionately affect borrowers of color in the financial marketplace, but more must be done to make the database a better tool for identifying patterns of discrimination."

Why Banking Groups Don't Like the Changes

Organizations for financial services companies aren't happy about the addition of consumer narratives to the database. President and CEO of the Mortgage Bankers Association says the new system doesn't do enough to ensure complaints are valid and doesn't give financial services companies an equal opportunity to respond to complaints. The Consumer Bankers Association says the narratives amount to little more than unverified public "shaming" of banks.

Additionally, the American Bankers Association says the lack of a narrative option for financial services companies give these companies "no meaningful way to respond," and that the consumer soapbox "risks turning the CFPB database into a questionable - even misleading - resource and risks tarnishing the reputation of individual companies without substantiation." The Association expects that many financial services companies will elect not to engage in public debate with their customers.

Looking Ahead

The CFPB acknowledges that there is room for further changes. It says the organization is considering options for publishing positive consumer feedback on financial services as well. This could include either providing more information on how companies handle complaints or providing consumer compliments of financial services companies in a forum independent of the complaint database. The Bureau is currently seeking input on these possibilities and says it "welcomes other ideas." For now, however, consumers can go into much greater detail in a public forum about difficulties with common financial products, and financial services companies should be aware.