Auditing and Financial Management:

Financial Institution Regulatory Agencies Can Make Better Use of Consumer Complaint Information

GGD-83-31: Published: Aug 25, 1983. Publicly Released: Sep 29, 1983.

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The Federal Deposit Insurance Corporation (FDIC), the Federal Home Loan Bank System (FHLBS), the Federal Reserve System (FRS), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) accept, investigate, and resolve consumers' complaints against the banks and saving institutions they regulate. In response to a congressional request, GAO reviewed these agencies' handling of consumer complaints against banks and other regulated financial institutions, including how complaint information is used for supervisory and policymaking purposes.

GAO found that agency complaint systems often help consumers solve significant problems about financial matters. Most favorable resolutions involved situations in which financial institutions had made errors or had violated laws or regulations. However, GAO analyzed 119 serious complaints that uncovered violations of laws or regulations and found that information from these complaints was often not used during subsequent compliance examinations. A review of these examinations showed that only one-third of the time was an examiner even aware that any of the 119 complaints had been filed against an institution since the last examination. In its investigation of how well agencies handled consumers' complaints about credit discrimination, GAO discovered that federal agencies did give some discrimination complaints the special handling suggested by agency procedures. However, this investigation did not allow GAO to conclude that special handling should have been used more often because the agencies did not require complaint handlers to document reasons for the type of discrimination investigations they performed. GAO also studied complaints that dealt with the treatment of inactive and dormant accounts to determine how these complaints were used by agencies in setting policy for banking and savings industries. GAO found that the information contained in complaint files was not organized in a way that would be most useful to policy makers concerned with unfair or deceptive practices.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FRS will reemphasize coordination to complaint handlers but does not plan to alter its computerized data system.

    Recommendation: The Chairmen of FDIC, FRS, and NCUA and the Comptroller of the Currency should alter their computerized complaint data systems to identify which complaints require followup or which provide information that may be useful in the examination or supervision process.

    Agency Affected: Federal Home Loan Bank Board

  2. Status: Closed - Not Implemented

    Comments: OCC believes that changes to its current procedures are not warranted.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should require local complaint handlers to document reasons for selecting the types of discrimination investigations they perform and require that unverified information supplied by institutions during investigations be verified during subsequent compliance examinations.

    Agency Affected: Department of the Treasury: Office of the Comptroller of the Currency

  3. Status: Closed - Not Implemented

    Comments: FHLBS believes that changes to its current procedures are not warranted.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should require local complaint handlers to document reasons for selecting the types of discrimination investigations they perform and require that unverified information supplied by institutions during investigations be verified during subsequent compliance examinations.

    Agency Affected: Federal Deposit Insurance Corporation

  4. Status: Closed - Not Implemented

    Comments: FDIC believes that changes to its current procedures are not warranted.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should require local complaint handlers to document reasons for selecting the types of discrimination investigations they perform and require that unverified information supplied by institutions during investigations be verified during subsequent compliance examinations.

    Agency Affected: Federal Home Loan Bank Board

  5. Status: Closed - Not Implemented

    Comments: NCUA believes that changes to its current procedures are not warranted.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should require local complaint handlers to document reasons for selecting the types of discrimination investigations they perform and require that unverified information supplied by institutions during investigations be verified during subsequent compliance examinations.

    Agency Affected: Federal Home Loan Bank Board

  6. Status: Closed - Not Implemented

    Comments: FHLBS receives so few complaints, it is felt, that a change in the current system is not warranted.

    Recommendation: The Chairmen of FHLBS and NCUA should consider adopting similar classification codes to facilitate broader comparisons through the entire regulated financial industry and add an additional code to their complaint data systems to assist in identifying and evaluating potentially unfair or deceptive practices that require further study.

    Agency Affected: Department of the Treasury: Office of the Comptroller of the Currency

  7. Status: Closed - Not Implemented

    Comments: NCUA receives so few complaints, it is felt, that a change in the current system is not warranted.

    Recommendation: The Chairmen of FHLBS and NCUA should consider adopting similar classification codes to facilitate broader comparisons through the entire regulated financial industry and add an additional code to their complaint data systems to assist in identifying and evaluating potentially unfair or deceptive practices that require further study.

    Agency Affected: Federal Deposit Insurance Corporation

  8. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairmen of FDIC and FRS and the Comptroller of the Currency should devise and implement consistent industrywide complaint classification and reporting procedures to make consumer complaint information more accessible and usable for policy analyses.

    Agency Affected: Federal Reserve System

  9. Status: Closed - Implemented

    Comments: The complaint codes at OCC have been changed to encompass the categories used by FDIC and FRS, as well as the more specific codes always used by OCC. The coding system is not exactly comparable because of the large numbers of complaints received. OCC believes a more specific coding scheme is needed than the ones used by FDIC and FRS.

    Recommendation: The Chairmen of FDIC and FRS and the Comptroller of the Currency should devise and implement consistent industrywide complaint classification and reporting procedures to make consumer complaint information more accessible and usable for policy analyses.

    Agency Affected: Federal Reserve System

  10. Status: Closed - Not Implemented

    Comments: FRS believes that changes to its current procedures are not warranted.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should require local complaint handlers to document reasons for selecting the types of discrimination investigations they perform and require that unverified information supplied by institutions during investigations be verified during subsequent compliance examinations.

    Agency Affected: National Credit Union Administration

  11. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairman, FHLBS, should require agency staff to identify and refer fair housing complaints to the Department of Housing and Urban Development, as specified in their 1980 memorandum of understanding.

    Agency Affected: National Credit Union Administration

  12. Status: Closed - Not Implemented

    Comments: FRS does not believe any changes to its current procedures are needed; it feels the current level of coordination is sufficient.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should revise their complaint handling and examination procedures to include specific requirements for coordinating complaints, examinations, and supervisory efforts. In particular, they should require followup during subsequent examinations to ensure that measures were taken to correct identified violations and to ensure that violations are not affecting similarly situated customers and require at least minimal documentation of all work performed.

    Agency Affected: National Credit Union Administration

  13. Status: Closed - Implemented

    Comments: FDIC will reemphasize coordination to complaint handlers but does not plan to alter its computerized data system.

    Recommendation: The Chairmen of FDIC, FRS, and NCUA and the Comptroller of the Currency should alter their computerized complaint data systems to identify which complaints require followup or which provide information that may be useful in the examination or supervision process.

    Agency Affected: Federal Deposit Insurance Corporation

  14. Status: Closed - Implemented

    Comments: OCC will reemphasize coordination to complaint handlers but does not plan to alter its computerized data system.

    Recommendation: The Chairmen of FDIC, FRS, and NCUA and the Comptroller of the Currency should alter their computerized complaint data systems to identify which complaints require followup or which provide information that may be useful in the examination or supervision process.

    Agency Affected: Federal Home Loan Bank Board

  15. Status: Closed - Implemented

    Comments: NCUA will reemphasize coordination to complaint handlers but does not plan to alter its computerized data system.

    Recommendation: The Chairmen of FDIC, FRS, and NCUA and the Comptroller of the Currency should alter their computerized complaint data systems to identify which complaints require followup or which provide information that may be useful in the examination or supervision process.

    Agency Affected: Federal Home Loan Bank Board

  16. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairman, FHLBS, should take steps to ensure that the followup code currently in the FHLBS data system is consistently applied.

    Agency Affected: Federal Reserve System

  17. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should revise their complaint handling and examination procedures to include specific requirements for coordinating complaints, examinations, and supervisory efforts. In particular, they should require followup during subsequent examinations to ensure that measures were taken to correct identified violations and to ensure that violations are not affecting similarly situated customers and require at least minimal documentation of all work performed.

    Agency Affected: National Credit Union Administration

  18. Status: Closed - Implemented

    Comments: Due to budget limitations, FDIC has increased its reliance on complaints as a source of information about problems with consumer compliance.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should revise their complaint handling and examination procedures to include specific requirements for coordinating complaints, examinations, and supervisory efforts. In particular, they should require followup during subsequent examinations to ensure that measures were taken to correct identified violations and to ensure that violations are not affecting similarly situated customers and require at least minimal documentation of all work performed.

    Agency Affected: National Credit Union Administration

  19. Status: Closed - Not Implemented

    Comments: NCUA has totally decentralized complaint handling responsibilities to its regions. Headquarters retains no responsibilities in this area.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should revise their complaint handling and examination procedures to include specific requirements for coordinating complaints, examinations, and supervisory efforts. In particular, they should require followup during subsequent examinations to ensure that measures were taken to correct identified violations and to ensure that violations are not affecting similarly situated customers and require at least minimal documentation of all work performed.

    Agency Affected: Federal Home Loan Bank Board

  20. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairmen of FDIC, FHLBS, FRS, and NCUA and the Comptroller of the Currency should revise their complaint handling and examination procedures to include specific requirements for coordinating complaints, examinations, and supervisory efforts. In particular, they should require followup during subsequent examinations to ensure that measures were taken to correct identified violations and to ensure that violations are not affecting similarly situated customers and require at least minimal documentation of all work performed.

    Agency Affected: National Credit Union Administration

  21. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chairmen of FDIC and FRS and the Comptroller of the Currency should devise and implement consistent industrywide complaint classification and reporting procedures to make consumer complaint information more accessible and usable for policy analyses.

    Agency Affected: Department of the Treasury: Office of the Comptroller of the Currency

 

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