A government complaint database that helps consumers resolve grievances with financial institutions is one of several services that could soon be eliminated, according to a memo by House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Tex), which was leaked to the press yesterday.
According to individuals familiar with its workings, the Consumer Complaint Database, sponsored by the Consumer Financial Protection Bureau (CFPB), has provided useful information and assistance not only to consumers, but to businesses as well.
The fate of the database was first mentioned yesterday when Bloomberg reported on a memo by Hensarling, an outspoken critic of the CFPB. The memo outlined a new version of the Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs), a bill originally advanced by the House Financial Services Committee in September.
The new bill would lead to the repeal of the Consumer Complaint Database. It would also eliminate the CFPB's authority to punish unfair, deceptive or abusive practices among banks and other lenders, and it would allow the President to handpick—and fire—the bureau's director at will.
Since the database went live in late 2012, consumers have been able to report their complaints and get a company response, and in some instances redress. About 25,000 complaints are filed each month from consumers about their dealings with banks, credit card issuers, mortgage lenders, student-loan servicers and other financial products and services.
When a complaint is filed by a consumer, the CFPB alerts financial institutions to the complaint and the company must provide a response to the consumer through the Consumer Complaint Database, usually within 15 days. The CFPB logs the complaints in the database showing not only the name of the company the consumer is complaining about, but also how quickly the company responded and whether the consumer was satisfied with the resolution of the complaint.
The CFPB says restitution from database complaints has contributed to its providing nearly $12 billion in relief to 29 million aggrieved consumers in the past five years.
CR's recent Consumer Voices survey shows that Americans have concerns about the accountability of the banking industry. Almost two-thirds of respondents said they are either only slightly or not at all confident that banks and investment companies are acting transparently and responsibly to charge reasonable fees and protect their investments.
Ongoing Controversy
The Consumer Complaint Database has had its critics. Banks and other financial institutions have expressed concern that it allows consumers to report complaints anonymously, and that the CFPB doesn't not fully vet the complaints for accuracy.