Card Industry Wants to be on Same Page as CFPB, Sa

NEW YORK, July 17, 2013 (GLOBE NEWSWIRE) -- "If there is one thing credit card issuers and the CFPB can agree on, it's that customer satisfaction is critically important," says Melanie Effertz, Managing Associate at Auriemma Consulting Group. "In fact, both feel the need to measure and monitor customer satisfaction on a regular and robust basis."

To this end, the CFPB has established an online portal for capturing consumer complaints. The Bureau now requires card issuers to respond to each registered complaint and demonstrate an effort to resolve it in a timely manner. By doing so, in some regards, it seems the CFPB has chosen to measure card issuers on the inverse of satisfaction – focusing on customer dissatisfaction.

Theoretically, this could work well.  However, the Bureau's definition of what constitutes a complaint – any expression of dissatisfaction regarding a financial institution within its jurisdiction – is vague. Along with more legitimate complaints, the current definition requires issuers to capture complaints that a) aren't truly significant, and b) are outside the issuers' sphere of influence.

The results have had significant implications for customer service departments. In order to track and establish fair treatment for each cardholder, customer service agents are given less discretionary power and are more frequently following strict scripts. This reduces a card issuer's ability to give agents latitude to go beyond the scripts to customize the treatment of customers, make exceptions, waive fees, and resolve issues. The complaint tracking regulation also has had an impact on operations. Agents are spending additional time on the phone with customers to ensure that inquiries are resolved. This has increased handling time, creating the need for additional soft skill and regulatory training. Some card issuers have increased their workforce to meet the new requirements. The actions card issuers are taking have significantly increased expenses and impacted their bottom line.

To alleviate this problem, some card issuers have suggested a scale to the CFPB to help delineate and prioritize complaints. Currently, some card issuers are segmenting complaints into tiers from mentions of dissatisfaction (level 1), to escalations (level 2), to regulatory or Office of the President complaints (level 3). This would allow issuers to, pending a more clear definition from the CFPB, help determine the level of importance of each complaint.

In the longer term, a more targeted CFPB definition of a complaint would be very helpful for card issuers to more efficiently track and address complaints. In addition, the CFPB needs to work with card issuers to develop an appropriate classification of and response to complaints that are outside of the their control, such as fraud/chargebacks, which involve the merchants, or fraud related incidents such as "credit repair" organizations that encourage cardholders to apply for a new Social Security number.

"Despite the pressures and challenges, card issuers are responding to cardholder complaints within the required 15 days 95% of the time," says Effertz. "Working in tandem with the CFPB would help both parties meet the goal of ensuring fair treatment and the highest possible level of care for cardholders."

About Auriemma Consulting Group

ACG is a boutique management consulting firm with specialized focus on the Consumer Payments and Lending space. We deliver pragmatic, actionable solutions and insights that add value to our clients' business activities across a broad set of topics and disciplines. Complementary to our core consulting business, ACG facilitates Industry Roundtable groups spanning a variety of industries, in which clients exchange information through activities managed by ACG, comparing and analyzing industry practices and benchmarks so that each member can optimize its own performance. Founded in 1984, ACG has grown into a diversified firm of 45+ employees with offices in New York and London. For more information, contact Melanie Effertz at 212-323-7000 or melanie.effertz@acg.net.

Melanie Effertz 212-323-7000