The tougher consumer compliance net has largely ensnared community banks just as it has big banks. But regulators' decision to go public with customer complaints against large banks, while leaving those filed against smaller ones unpublished, has emerged as a striking difference.
The three regulatory agencies that still oversee consumer compliance for banks with assets of less than $10 billion do not yet appear ready to mirror the Consumer Financial Protection Bureau, which supervises the largest banks, and make individual complaint data public.
Consumer advocates and even some industry representatives say that even though the CFPB's expanded public complaint database covers the vast majority of records dealing with bank-customer disputes, the discrepancy between large and small institutions in the database creates an unlevel playing field. That might ultimately prompt the other agencies to follow the CFPB's lead.
"Although generally smaller banks may focus more on service than bigger banks … we really won't know if there are certain problems unless this information is disclosed and everyone can look at what's going on at every level of the market," said Ruth Susswein, the deputy director of national priorities for Consumer Action. "If there is a trend going on, is it going on at only the big banks, or is it a systemic problem?"
The Dodd-Frank Act preserved consumer compliance authority for the Federal Deposit Insurance Corp., Federal Reserve Board and Office of the Comptroller of the Currency over institutions with assets of less than $10 billion. The CFPB has rule-writing powers for the whole industry, but it supervises consumer compliance only at banks above that threshold, which represent more than 80% of the industry's assets but only about 1.5% of all institutions.
The bureau announced a dramatic expansion last month of its database of complaints filed through the CFPB, extending the portal's scope beyond an earlier version that included just credit card-related complaint records to cover other sectors. The database now includes more than 90,000 individual complaints.
While the records lack detailed narratives, online users can still search the data to determine the institution and type of product involved, a rough idea of what the issue was about and the status of the bank's response. Not surprisingly, outside analyses of the data have focused on which institutions drew the most complaints.
The FDIC, Fed and OCC have platforms that allow consumers to file complaints with their bank's regulator and they publish data on overall complaint numbers. The FDIC says that in 2012 it received 5,088 written complaints against state nonmember banks; it has already responded in 98% of the cases. (The FDIC also responded to 403 written inquiries about institutions under its watch, as well as 2,721 telephone calls from the public and members of the banking community.)
The Fed's annual report includes similar data through 2011, although the CFPB assumed authority for the larger institutions in the middle of the year. The central bank said its centralized complaint line processed 41,631 total cases. The Fed that year also broke down data for 946 complaints filed against state member banks and selected nonbank subsidiaries of holding companies by what were the related regulations and product types.
Of the three, the OCC publishes the most detailed data. It has a website, helpwithmybank.gov, that provides a portal for filing complaints but also displays annual statistics on complaints received by the agency. In 2012, according to the data, it handled nearly 60,000 complaints and just over 33,000 inquiries. Over half of the complaints dealt with mortgage issues, followed by checking accounts (13.8%) and credit card issues (7.4%).
But the three agencies have not announced any plans to disclose individual data.
"We would like to see greater transparency and an even playing field across all of the regulated institutions. That transparency … creates an increased level of [complaint] resolution and best practices by the industry," said David Berenbaum, chief program officer for the National Consumer Reinvestment Coalition.
Prentiss Cox, a law professor at the University of Minnesota and onetime manager of the consumer enforcement division in the state's attorney general's office, said that if availability of public complaint data about the industry is only partial it creates an incomplete picture in the market about the how the industry is catering to consumers.
"A plaintiff's attorney … may have access to information that would allow them to suggest that a class action would be appropriate with a larger bank, but not with a smaller bank," he said. Yet, Cox added, "maybe that's not such a horrible result."
"It's probably better that everyone go online with these public complaints. On the other hand, the market has historically been led by the larger institutions," he said. "I'm less concerned about it because I'm more concerned about what the practices are at big banks, because the big banks tend to set the permissible practices in the industry."
Bankers have opposed several aspects of the CFPB portal, pointing out, for example, that the bureau is not fully verifying complaints before including them in the database, and the records could create a false perception about institutions that even their regulator does not share.
"It is an issue that a flawed database is only visited on some. But it's not solved by visiting it on everybody," said Richard Riese, a senior vice president of the American Bankers Association.
"Part of our criticism of the bureau is it's a selective release of what is otherwise supervisory information," Riese said, "and it's quite clear that the bureau has much more sophisticated judgments about their institutions … than is revealed by consumer complaint data. Yet it is also as clear that those sophisticated judgments are supervisory privileged. What they're knowingly doing is putting out only part of the story."
Other industry representatives are more focused on the disparity. In a statement emailed to American Banker, Consumer Bankers Association President Richard Hunt said that, while the group urges the CFPB to verify data before being published, it "continues to support a level playing field across all providers of financial products."
Some said the CFPB's measures could lead to similar disclosures by the other regulators.
"It would not surprise me at all if the other agencies develop such a database, since they are sure to be criticized by consumer advocates for not having one," said Alan Kaplinsky, who heads the consumer financial services practice at Ballard Spahr.
"In addition to the fact that none of the complaints reflected in the CFPB's database are verified, it will appear to many consumers that the small banks with whom they conduct business are not the focus of consumer complaints," Kaplinsky said. "This situation makes for a very unlevel playing field."
Michael Calhoun, president of the Center for Responsible Lending, said the focus for now is on the CFPB portal, which covers "the bulk of the transactions." But that could change, he added.
"People want this [CFPB] database up and working to demonstrate its value to consumers," Calhoun said. "But I would expect that pressure" on the other regulators to disclose their data "to come in the future.
"Hopefully, it may be the case that there are competitive advantages where lenders that have a good record and whose complaints are publicly reported are being rewarded for that, so that other responsible lenders will want their regulators to likewise report their good complaint record."
But others said that is only the case if consumers truly take the time to evaluate individual complaint records.
"If the complaint database is there so consumers can educate themselves on institutions … and it is that type of educational forum, then I don't see why that type of data shouldn't be available for every institution," said Jeffrey Taft, a partner at Mayer Brown. "If the data is there so that the CFPB can determine whether there are certain institution and certain practices and procedures … that they want to specifically address, then the smaller banks probably aren't as relevant from that particular standpoint."