IBA Compliance Connection

Your go to source for compliance!

We allow customers to leave their utility bills with us, and we drop the bills at city hall for processing. We accidentally forgot one, and it went a few days past due. Our customer requested reimbursement from the city for the $2 late fee, without mentioning our institution’s name. We paid the late fee for our customer and apologized. Do we need to write this up as a complaint? This is just a service we provide our customers unconnected to any bank product.

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We believe that your bank’s internal policies and procedures would determine whether your institution should log this situation as a complaint.

We are not aware of a regulation or law that defines “consumer complaint,” although the federal banking regulators all expect financial institutions to track and respond to consumer complaints. Your primary federal regulator, the FDIC, expects financial institutions to maintain consumer complaints and to develop consumer complaint policies and procedures. The FDIC’s Compliance Examination Manual does not define “consumer complaint” but requires examiners to “discuss with management how complaints are identified and defined,” as complaints “may be indicative of a compliance weakness in a particular function or department.”

The FDIC held a teleconference on consumer complaints in 2013, which provides one instance of a definition of a “complaint:” “an allegation by, or on behalf of, an individual, group of individuals or another entity that a particular act or practice of a financial institution is unfair, deceptive, incorrect or violates a federal regulation or statute under which the financial institution must operate.” Consequently, we do not believe that a complaint needs to be related to a specific law or regulation, since acts and practices that are unfair, deceptive, or incorrect are also encompassed by that definition. However, the determination of whether this situation rises to the level of a consumer complaint depends on how your institution’s policies and procedures define “consumer complaint.”

For resources related to our guidance, please see:

  • FDIC Compliance Examination Manual, Section II, page 3.4–3.5, Compliance Management System (June 2019) (“An institution should be prepared to handle consumer complaints promptly. . . . Examiners should also discuss with management how complaints are identified and defined, as consumer inquiries may also highlight areas with increased risk of consumer harm and/or regulatory compliance concerns.”)
  • FDIC Compliance Examination Manual, Section II, pages 5.8 – 5.9, Review and Analysis (June 2022) (“Examiners are to determine the responsiveness and effectiveness of the consumer complaint resolution process. Material to be reviewed during completion of this section will include, at a minimum: . . . Consumer complaint policy or other written compliance procedures regarding complaints . . . All files related to the receipt and resolution of compliance related consumer complaints archived by the institution or the FDIC, including information from the FDIC’s automated complaint tracking system (EPIC)”)
  • FDIC Webinar, Consumer Complaints, slide 8 (December 18, 2013) (“Complaint: an allegation by, or on behalf of, an individual, group of individuals or another entity that a particular act or practice of a financial institution is unfair, deceptive, incorrect or violates a federal regulation or statute under which the financial institution must operate.”)