Washington CU Regulator Expects CUs to Measure Consumer Complaints

The Washington Division of Credit Unions is expecting that credit union board of directors and senior management should receive periodic reports regarding consumer complaints.

The state regulator stated that these periodic reports should include the following:

• The volume and types of complaints received;
• The channels in which complaints are received (e.g. social media, email, in person);
• The reimbursements paid for potential violations of consumer protection laws; and
• Any identified trends.

In addition, credit unions should clearly define procedures for processing member complaints, including complaints pertaining to third party service providers.

Texas CU Regulator Says Complaints Up 4 Percent for Fiscal Year 2019

The Texas Credit Union Department announced that the number of complaints against credit unions increased for fiscal year 2019.

For fiscal year 2019, the state regulator stated there were 363 complaints -- up from 349 complaints for fiscal year 2018.

The top five complaint areas were:

• Credit Report Issues (24.5 percent);
• Account/Loan Balances (10.7 percent);
• Customer Service (10.5 percent);
• Fraud/Unauthorized (9.1 percent); and
• Fee Related (7.2 percent).

Read the Newsletter.

Texas CU Regulator: Complaints Up Almost 20 Percent in FY 2018

The Texas Credit Union Department is reporting that there were 347 complaints against credit unions for fiscal year (FY) 2018. This is up almost 20 percent compared to fiscal year 2017.

The following chart identifies the top complaints received in fiscal year 2018.

Other frequently cited complaints included account/loan balances, collections, electronic funds transfers, hold on checks/accounts, closed or frozen accounts, vehicle title issues, billing disputes, and the purchase of collateral protection insurance for loans.

The Texas regulator noted that credit unions should work with their members to resolve issues before they become complaints.

Read the Department Newsletter.

Texas CU Regulator Reports Increase in Complaints for FY 2017

The Texas Credit Union Department reported that complaints about credit unions were up for fiscal year (FY) 2017 ending on August 31.

In FY 2017, the Department reported 280 complaints. This is up from 261 complaints for FY 2016.

Between FY 2012 and FY 2017, complaints are up approximately 61 percent.

The Department noted that many complaints arise from member service issues and poor communications.

The Department advised that working with members to resolve issues may prevent complaints from being filed.

Read the October Newsletter.

Good Customer Service at Large Florida CUs May Be an Urban Legend

A new report highlights the decline in customer service at Florida credit unions, as consumer complaints about Florida credit unions continue to rise.

The report looks at the number of consumer complaints filed with the Florida Department of Financial Institutions in 2015. Credit unions accounted for almost one-third of the 626 consumer complaints in 2015.

According to the "2015 FLORIDA BANK COMPLAINT ANALYSIS" by K.H Thomas Associates, LLC, the number of large Florida credit unions in the Top 10 Complaint list has risen over the last three years.

"Three of the 15 or one-fifth of the financial institutions on the Top Ten complaint list (counting ties) in 2013 were credit unions. In 2014, four of the 12 or one-third of the institutions in the Top Ten list (again counting ties) were credit unions. By 2015, five of the 12 or 42% of the institutions in the Top Ten list (again counting ties) were credit unions. Thus, the proportion of credit unions in the Top Ten complaint list increased from 20% to 33% to 42% in the last three years."

In 2015, Suncoast Credit Union tied for third with 32 complaints in 2015, Space Coast Credit Union had 29 complaints, VyStar had 19 complaints, Fairwinds Credit Union had 14 complaints, and MidFlorida Credit Union had 11.

The report also noted that a relatively high levels of complaints at Florida credit unions compared to their market share.

The Bank Complaint Index© or BCI is defined as a financial institution’s relative portion of complaints in a given year divided by its deposit market share as of the midpoint in the year. A BCI of 1.0 means that a bank’s complaints are equal to its market share. Ideally, a financial institution should strive for a BCI of 0.5 or lower. A BCI above 1.0 would suggest a problem.

According to the report, all five of the financial institutions with the highest BCIs in 2015, ranging from 3.8 to 8.8, were credit unions. Space Coast Credit Union had the highest BCI at 8.8, followed by Orlando-based Fairwinds Credit Union at 7.8.

The report stated: "Although credit unions are traditionally known for their good customer service, this complaint analysis ... suggests that this may be somewhat of an “Urban Legend” here in Florida based on these BCI results."

Below is a table listing banks and credit unions with the highest number of complaint in 2015 along with their corresponding BCI.

360 Federal Credit Union Settles ADA Complaint

U.S. Attorney’s Office for the District of Connecticut has reached a settlement with 360 Federal Credit Union (Windsor Locks, CT) to ensure equal access for individuals with disabilities at all 360 Federal Credit Union locations, pursuant to the Americans with Disabilities Act (“ADA”).

An individual, who is hard of hearing, alleged in a complaint that 360 Federal Credit Union would not accept his video relay calls.

Under the agreement, 360 Federal Credit Union will pay a small monetary sum to compensate the individual for the expenses he incurred as a result of the credit union’s failure to accept his video relay calls. The agreement also requires 360 Federal Credit Union to accept video relay calls in all of its credit union locations and amend its policies, practices, and training to ensure the removal of barriers to access at its branch offices.

Title III of the ADA prohibits discrimination against individuals with disabilities by businesses that serve the public. Among other things, the ADA requires financial institutions, accountants, lawyers, doctors and other businesses to provide auxiliary aids and services that are necessary for effective communication. For individuals who are deaf or hard of hearing, auxiliary aids include qualified sign language or oral interpreters, use of relay services, computer-assisted real time transcription, and, for simple communications, the exchange of written notes.

Read the press release.

Florida Depositors Lodge More Complaints against CUs than Banks

A study by a banking analyst once again finds that Florida depositors lodge more complaints against credit unions than banks after controlling for complaint market share versus deposit market share for the institution.

"Miami banking analyst Ken Thomas analyzed consumer complaints filed by Floridians in 2014 against 12 financial institutions. He found that four credit unions had the worst records.

Space Coast Credit Union of Melbourne had the highest incidence of complaints, followed by MidFlorida Credit Union of Lakeland, Suncoast Credit Union of Tampa and VyStar Credit Union of Jacksonville. Among banks, the highest complaint indexes were for PNC and JPMorgan Chase."

Read the story.

CFPB Proposal Would Subject Banks and CUs to Reputational Risk

Several years ago, I spoke to the 33rd Annual National Directors' Convention in Las Vegas about the huge threat that the Consumer Financial Protection Bureau (CFPB) poses to banks and credit unions.

The latest example of this threat is a new proposal by the CFPB to publish consumers’ narratives in its consumer complaint database. A company subject to a complaint would be given an opportunity to post a response that would appear next to a customer’s story. If the company does not respond in 15 days, the complaint narrative would be published.

The CFPB states that "by giving consumers an option to publicly share their stories, the CFPB would greatly enhance the utility of the database, a platform designed to provide consumers with valuable information needed to make better financial choices for themselves and their families."

But unlike YELP, the CFPB database will not include information about favorable consumer experiences.

The public disclosure of unverified consumer complaint narratives will not advance the goal of helping consumers to make informed and responsible financial decisions. However, it will subject financial institutions to reputational risk.

Read the press release.

CU Member's Yearlong Bureaucratic Nightmare

The Tampa Bay Tribune is reporting on Mike Jordan's nearly yearlong bureaucratic nightmare with Achieva Credit Union and the National Credit Union Administration (NCUA).

The story concludes that his experience "changed his opinion of credit unions as nonprofits looking out for the little guy."

The issue dealt with an "ädd-on" certificate of deposit (CD) issued by Achieva Credit Union that advertised that money could be added onto the CD. When Mike Jordan tried to add money the second time to the CD, the credit union refused.

Mike Jordan filed a complaint with NCUA in July of last year and proceeded to get the regulatory run-around.

However, he kept pursuing the issue and finally received a letter from NCUA dated May 30 that stated Achieva's disclosures were "not clear and conspicuous — a violation of the Truth in Savings Act." The credit union was instructed to correct the defective notice and to work with Jordan to find an amicable solution.

But it was only when contacted by the newspaper did the credit union management state that Mike Jordan would be reimbursed for the lost interest income.

Read the story.

Florida CUs Have Highest Complaint Incidence

A report by K. H. Thomas Associates found that two Florida credit unions -- Space Coast and Brightstar -- had the highest Bank Complaint Index (BCI) in Florida.

The report noted that it found it surprising that a growing number of credit unions were in the BCI Top Ten list in recent years, considering that credit unions have a reputation of providing good customer service.

The report found that "[t]wo of the highest BCIs in 2013, both over 6.0, were from credit unions and three of the four highest BCIs in 2013, all over 1.5, were from credit unions."

The BCI is calculated by dividing the complaint market share by deposit market share.

Study: Two Florida CUs Have the Greatest Incidence of Complaints

Two Florida credit unions had the highest incidence of consumer complaints in 2012.

While other institutions had more complaints, these two credit unions had the most complaints relative to their size.

K. H. Thomas Associates calculates the Bank Complaint Index© or BCI, which is defined as a bank’s relative portion of state complaints in a given year divided by its deposit market share as of the midpoint in the year (June 30).

A BCI of 1.0 means that a bank’s complaints are equal to its market share. A BCI above 1 means that complaints are greater than the institutions market share.

According to the Florida Bank Complaint Analysis, Space Coast Credit Union in Melbourne had the highest BCI of 7.5. This is the third year in a row that Space Coast Credit Union had the highest BCI score.

Joining Space Coast in the 2012 rankings was Fairwinds Credit Union in Orlando with a BCI of 5.3.

These two credit unions were the only institutions with a BCI score above 5.