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Compliance Challenge of Consumer Complaints

When you’re in a highly regulated industry like banking, you’re no stranger to the sometimes overwhelming compliance requirements at the national, regional and state levels that apply to your customer interactions. “Compliance,” “risk” and “regulation” are often seen as dirty words. But compliance and regulation are concepts that banks need to understand and internalize to be successful in a world in which consumers have more power than ever to provide feedback – negative or positive – and in which they share their complaints with regulators.

Failure to comply with regulations can result in significant expense for banks, including the potential for large fines and other penalties, as well as the associated negative impact to the company’s brand and reputation. The Consumer Financial Protection Bureau (CFPB) has already handled more than 300,000 consumer complaints since July 2011 and has also aggressively pursued financial services providers for deceptive practices. Similarly, the Federal Trade Commission (FTC) has very publicly issued fines and penalties to several prominent financial services organizations.

In general, these regulatory examiners will consider how many customers were impacted and for how long, as well as if the impact was financial. They also investigate the cause for customer complaints, whether it was technology or process/procedural issues. During a routine exam or audit, regulatory agencies review a company’s complaints management program, so having comprehensive processes in place, with supporting data and documentation, is strongly recommended to show you are making a good faith effort to address any issues.

To get ahead of regulatory scrutiny, banks need to be able to easily and effectively detect and analyze consumer complaints. Dick Bucci of Pelorus Associates suggests the following framework for the technology capabilities needed to help employees adhere to banking policies and regulatory requirements:

Capture: The ability to capture and store voice and data interactions is key. Managers must be able to selectively focus their attention on the types of interactions that are most likely to be problematic. Examples include transactions, sharing personal data and activities related to collection.

Retrieve: Banks must be able to retrieve data quickly and easily. The information could be structured, such as application forms and contracts, or unstructured, such as free-flow telephone conversations.

Verify: The bank’s compliance officer or regulatory examiner needs to be able to review recorded interactions to confirm that required processes have been followed or disclosures properly made and acknowledged, and that these interactions have not demonstrated any improper behaviors.

Isolate: In order to identify root causes and address potential and actual compliance violations, technology applications must be able to analyze a large number of stored consumer interactions and discover errors or omissions in scripts (making appropriate disclosures, for example), business processes, forms, or even conversations via chat or social media.

Warn: A best-of-breed compliance solution should also provide an early-warning system that can surface possible risk exposures to management before they become even larger issues.

Prevent: Wherever possible, corrective and preventive measures should be put in place to significantly reduce the risk of compliance violations before they occur.

Report: Self-identification and prompt remediation of all possible violations is strongly advised, although regulatory agencies have warned that doing so will not ensure that the organization will avoid any fines or penalties.

From a brand reputation perspective, regularly reviewing customer complaints gives banks the information they need to improve customer experiences, identify where problems exist and correct them quickly. Acting on this type of information can significantly improve customer experience and loyalty, leading to an overall competitive advantage. Using available technology such as speech and text analytics, banks can identify trends and develop new competitive offerings, as well as track complaints for transactions completed by individual employees and schedule coaching and training to address issues and improve performance.

Ms. Palocsik is solutions marketing director, Retail Financial Services, for Melville, N.Y.-based Verint Systems Inc. She can be reached at [email protected].