Compliance Blog

Written By Victoria Daka, Regulatory Compliance Specialist

The National Credit Union Administration (NCUA) recently posted a Letter to Federally Insured Credit Unions regarding improving the process for consumer complaints. This Letter encompasses two distinct changes to the consumer complaint process, the appeals process and recommendations for credit unions to maintain effective procedures to process consumer complaints within their compliance programs.

For background, NCUA’s Consumer Assistance Center (CAC) is tasked with addressing the consumer complaints of federal credit unions (FCU) and in certain instances, federally insured state charters.  NCUA’s Office of Consumer Protection, Division of Consumer Affairs administers CAC. CAC may receive complaints via online, email, fax and regular mail. The complaint forms can be found on MyCreditUnion.gov here.

To assist both consumers and FCU’s in the consumer complaint process, CAC is making improvements to its intake process in two distinct phases. In the first phase, the FCU is given 60 days to attempt to resolve the issue. In the second phase, CAC formally investigates the matter.

Phase One: Attempted Resolution by the Credit Union

In this phase, the goal is for the FCU to resolve the matter without a CAC formal investigation. Once the complaint is received by CAC, it assigns the complaint a case number. After a case number is attached to the complaint, the complaint, along with all the documentation the consumer provided is forwarded to the consumer’s FCU’s supervisory committee and CEO. The FCU’s supervisory committee has 60 calendar days from receipt of the compliant to review and, if possible, resolve the matter. Additionally, CAC sends an acknowledgement letter to the consumer indicating that the complaint was received and forwarded to the FCU to resolve the issue.

During this 60-day period, CAC recommends that FCU’s take the following steps in resolving complaints:

• “Review the complaint in accordance with the suggestions detailed in the attached OCP guide, Responding to Consumer Complaints;

• Communicate directly with the consumer as needed and appropriate; and

• Respond in writing to the consumer, with a copy to the Consumer Assistance Center, referencing the case number and indicating whether the credit union has been able to resolve the matter.”

If the FCU’s supervisory committee notifies CAC in writing that it has resolved the complaint, then CAC closes the case, and the complaint does not reach the second phase – formal investigation. However, a formal investigation is necessary in the three following instances: 1) the FCU supervisory committee fails to submit a written response within the 60-day timeframe to CAC of a resolution; 2) the FCU supervisory committee notifies CAC in writing that it was unable to reach a resolution on the matter; and 3) the consumer disputes the resolution reached by the FCU and notifies CAC within 30 calendar days of the FCU’s response.

Phase Two: Consumer Assistance Center Investigation

 In the second phase, CAC formally investigates the matter. CAC sends a letter to the Chairman of the FCU’s supervisory committee with a copy sent to the CEO. This letter includes the original complaint and documents provided. The letter also informs the FCU that the matter is under formal investigation and requests a written response from the FCU within 30 calendar days of receipt of the letter.  Like phase one, CAC sends a letter to the consumer, but in this phase, notifies the consumer that the matter is under formal investigation, at this point.

 Upon receipt of the supervisory committee’s response, CAC reviews the response “to ensure it adequately addresses issues raised in the complaint and that the action(s) taken, if any, are consistent with federal financial consumer protection laws and regulations.” If the review is unsatisfactory, CAC will request additional information and/or clarification from the supervisory committee and will inform the consumer that the investigation continues.

Appeal of Consumer Assistance Center Determination

Both consumers and credit unions may request a review by the Director of the Division of Consumer Affairs of the CAC’s final determination. The Division of Consumer Affairs must receive this formal appeal within 30 calendar days of receipt of the CAC’s determination letter. However, the right to file a complaint with the NCUA Ombudsman remains, although this Letter encourages the process through CAC.

Managing Compliance Risks

The letter goes on to note the importance of managing compliance risk for FCU’s.

“As member-owned financial cooperatives, credit unions have a strong interest in managing compliance and reputational risk. A critical element of a strong compliance management system is establishing written policies and procedures to record, categorize, analyze, investigate, resolve, and respond to complaints in an appropriate and timely manner.”

This Letter to Federally Insured Credit Unions can be viewed in its entirety here. In addition, this Letter includes a helpful one-page enclosure on recommendations for handling consumer complaints that can be found here.