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CFPB Proposes to Publish Complaint Narratives against Banks, Servicers

In the wake of the financial crisis, the trust level between the banks who are seen by many as a culprit in the downturn and consumers who are, in many cases, still attempting to fully recover is tenuous at best. In the middle, you've got the referee: a federal government, charged with ensuring that the circumstances seen in the latter part of the previous decade do not repeat themselves.

To that end, the Consumer Financial Protection Bureau (CFPB) proposed a new rule to allow consumers that post complaints to the option to opine on the details of their complaint made on the bureau’s public facing complaint database.

The CFPB argues that allowing consumers to expand on the circumstances surrounding their complaints allows for greater transparency in the system.

“The consumer experience shared in the narrative is the heart and soul of the complaint,” said CFPB Director Richard Cordray. “By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole.”

The banking and servicing community is, perhaps understandably, concerned.

“Publishing narratives of every unverified complaint will give only the illusion of disclosure. Banks have an obligation to their customers to maintain the confidentiality of their information, making it virtually impossible for a bank to offer a complete response to these narratives,” said Richard Hunt, President and CEO of the Consumer Bankers Association. “It is the role of the CFPB as the traffic cop to distinguish violations of law from unfounded complaints. Instead, they want to let others figure it out from one-sided and unverified narrative information.”

The CFPB began receiving complaints from consumers when it opened its doors in 2011. It currently houses the nation’s largest public collection of consumer complaints, with more than 400,000 grievances and growing.

Consumers already have the option of posting a short synopsis of the basic facts of their complaint in an attached small text box. This rule proposal, published for 30 days of comment will allow full narratives.

The bureau argues that the process safeguards the banks reputations by allowing them to answer to the complaint with a concurrently posted response.

Hunt is not convinced.

“This action will ultimately add to consumer confusion, harm industry reputations, and undermine any hope the CFPB may have to be viewed as a fair and honest broker. For an agency which prides itself on being driven by ‘accurate’ data, this is very disappointing.”

About Author: Derek Templeton

Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.
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