Complaining is an age-old habit of customers, but too many complaints about lending can lead to oversight from regulators.
As such, there are some key ways to mitigate customer complaints — such as introducing some dedicated internal policies that show tangible examples of what a lender is doing to address complaints, for instance. To address complaints, lenders can start with a committee that looks at macro-level issues, followed by initiatives taken to address the underlying issue that leads to complaints.
And in addition to trying to prevent complaints from the get-go, looking at ways to address complaints more efficiently when they inevitably arrive, will also help prevent regulators from knocking on your door.
To that end, here are three best practices for complaint management:
1. Form a Committee to Look for Trends
“Our [CMS] portal will spit out reports and it will show what categories of complaints happen the most,” Mike Lavin, executive vice president and chief legal officer at Consumer Portfolio Services (CPS), said at the 2017 Auto Finance Summit in late October. CPS will then take those reports to a designated committee comprised of six or seven upper-management executives to determine and discuss those trends.
“We talk about what people are complaining about, and what can we do about it?” he said. For example, one common complaint CPS found was that people do not understand why they owe what they owe. “They don’t understand what their balance is, and … they don’t really understand how simple interest is calculated and how it works,” he added.
2. Show Regulators What You’re Doing to Address Complaints
“The [regulators] want to see tangible things being done to protect consumers,” Lavin said. This means that when a complaint is made, or a trend occurs in complaints, there should be noticeable action taken on the part of lenders to address the underlying issues.
For example, in an effort to the common complaint at CPS that customers don’t understand why the owe what they owe, for example, CPS decided to implement “ad-hoc training” with its servicing representatives on how to explain simple interest to customers. Additionally, CPS included inserts into its billing statements and welcome packages on simple interest.
“That’s what regulators want to see — they want to see from A to Z,” Lavin said, adding that while complaints did not necessarily go down, it’s important to understand that what a lender can control is what it’s doing to address complaints.
3. Have More Than One Person Look at an Investigation
Having more than one pair of eyes can help better serve both customers and a lender, Robert Tennant, vice president and general counsel at Veros Credit LLC, also said at AFS 2017 late October.
Veros Credit has a small team of three to four people, who have other primary roles at the company, but handle complaints when they are able. Tennant has a policy of personally reviewing the majority of responses that Veros intends to provide a customer following an investigation into his or her complaint.
“I will generally review the majority of responses, just to kind of have a different set of eyes than the person doing the investigation, and to really make sure the response is answering the question,” he said.
Reviewing the responses is important because when someone is working on a complaint investigation, they can get so deep into the process that they forget to ask the important questions, he added. By having someone outside of that investigation review a response before sending it out, it ensures that regulators don’t start knocking on the door asking for another answer or for more information, he said.