Anne Wallace, Senior Director of Consumer Financial Services at Financial Services Roundtable on the Consumer Financial Protection Bureau’s (CFPB) Proposal for a complaint portal.
The Consumer Financial Protection Bureau was designed to protect American consumers. But the Bureau is about to launch a complaint system that will give consumers misguided and even false information when they’re making decisions about financial services companies.
• Authorities at the Consumer Financial Protection Bureau (CFPB) wants to begin posting anonymous, unverified complaints it collects about financial services companies onto a government website.
• The complaints may not be valid or even true, but they’ll still be publicly showcased, which could give consumers false information.
• Personal information, like account numbers and last names, will be stripped from the complaints, making it impossible for anyone to tell if the complaint is true or accurate.
What’s the problem?
• The complaints will be posted publicly, but the businesses named in the complaint won’t be able to submit an explanation or a status update on the issue, even if the complaint has been fully resolved.
• This will only give consumers half of the facts, painting an inaccurate or false version of the story. That could leave them unable to make accurate decisions about financial services businesses.
Where is the impact?
• Bureaucrats will post the complaints on a government website. This will give consumers the impression that the complaints are endorsed by the federal government.
• It will also suggest that the financial institutions named in the complaints haven’t moved to resolve the problem, as only one side of the story – the complaint – will be available.
• The financial services industry currently employs nearly 6 million Americans, more than the populations of Los Angeles and Houston combined.
• The financial markets play a significant role in keeping the American economy running, making up 7.9 percent of the U.S. GDP in 2012 – or about $1.4 trillion.
When will it happen?
• The CFPB has fast tracked the start date of this project to September 22, leaving businesses, experts and the American public no substantial time to weigh in on this important, critical issue.
• Many of the key details and questions about how the system will work still haven’t been answered.
• Government agencies are typically required to allot several months to collect and consider opinions from hundreds, if not thousands of sources before finalizing a regulatory decision.
• The CFPB appears to be bystepping the system of checks and balances that helps keep government bodies accountable.
Why is this happening?
• The CFPB was created to advocate on behalf of consumers, but this complaint collection plan does just the opposite.
• Rather than making the financial services industry easier for consumers to navigate and understand, consumers will be given only one side of the story.
• These rumors could cause consumers to seek third party, less regulated financial services options that are outside the safety net of the government regulated industry.
What’s wrong with collecting complaints?
• The CFPB’s 2013 annual report shows that its current complaint collection system is nowhere near foolproof.
• Nearly 70% of all complaints filed in 2013 were closed with a simple explanation.
The big question:
• If the CFPB’s mission is to help consumers, why aren’t they working to give them all of the facts? And more importantly, why would they actively hide half of the story?
The financial services industry remains committed to a strong, secure financial system and to working with the federal government and lawmakers to ensure America’s economy is secure. However, the CFPB’s proposal is bad news for the consumers they purport to help.
We urge Director Richard Cordray to reconsider this proposal.
The Consumer Financial Protection Bureau recently announced its plans to begin posting unverified consumer complaint narratives online. At the time, CFPB Director Richard Corday explained that publishing unverified narratives would help consumers make better informed decisions when shopping for financial services.
As a consumer educator, my reaction was disbelief that the CFPB could get it so wrong and shock that consumers, who expect and deserve facts from their government, would instead get rumors.
Imagine asking a police officer for directions in an unfamiliar city. You’d expect the police officer, a trusted law enforcement official, to point you in the right direction. But what if you followed the directions, only to find out the police officer had pointed you in the wrong direction? Would you still place your confidence in that government representative as an official source of reliable information?
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