Surprises in CFPB’s complaint database

Who complains the most to the Consumer Financial Protection Bureau?

Given the rhetoric surrounding the Bureau, some guessable answers might come to mind. But according to a recent analysis of the complaints database by Deloitte LLP, consumers in wealthier, older residential areas were more likely to submit complaints to the agency.

“Such consumers likely have more products and thus a greater chance of having a problem,” stated the firm’s analysis, “but their greater propensity to file complaints proved true even after adjusting for differences in product ownership.” One such adjustment was to evaluate only complaints made about mortgages in areas where many people hold mortgages; even then, the same pattern held true, with complaints filing as an area’s income levels increased.

Similarly, the Deloitte analysis found that complaints tended to rise as the age of an area’s population increased.

Does this mean that wealthier and older customers have more to complain about?

It’s more likely that they have greater awareness of their rights and of the ability to file complaints with the Bureau, said Dennis Kiefer, director of Deloitte Financial Advisory Services LLP. The analysis itself suggests that banks may need to be careful in projecting the behavior of other demographic groups’ from the database.

“Further analysis based solely on these populations may likely be needed to produce a more accurate understanding of their behavior, product needs, and preferences,” said the report, CFPB’s Consumer Complaints Database: Analysis Reveals Valuable Insights.

Kiefer suggested in an interview that the affluent and older consumers may not continue to be the top complainers. He said the picture could change as the number of complaints on file rises, and as more product categories are added to CFPB’s database.

Among other findings:

• Troubled mortgages lie behind most complaints.

More than half of the complaints submitted from March 2012 to April 2013 arose from mortgage lending. And the issue seems to be heating up, as the share of complaints generated by mortgages has been rising over that period, from 48.1% to 63.4%.

The analysis found that the majority of complaints about mortgages centered on the loan modification, collection, and foreclosure processes.

• Customer misunderstanding, rather than financial institution error, may bring about more complaints.

Complaints may be resolved in the consumer’s favor, but not necessarily. The analysis found that the portion of complaints resolved for the consumer has actually been dropping, from 30.9% in June 2012 to 18% in April 013.

“With 82% of complaints in April 2013 not being resolved in consumers’ favor, the data suggests that many complaints may be the result of customer misunderstanding or frustration rather than actual mistakes or operational errors by financial institutions,” the report stated.

What can be done about that? The firm advised improvements in customer communication.

• Complaint resolution times have improved.

The analysis pointed out that in December 2011 financial institutions were flagged as being untimely in responding to complaints in nearly one in ten cases. By April 2013, this had fallen to about one in 100 cases.

CFPB began accepting consumer complaints in July 2011, at the direction of the Dodd-Frank Act. The database started by compiling credit card complaints and now includes complaints relating to home loans, consumer loans, private student loans, bank products and services such as deposit accounts, money transfer service, debt collection, and credit reporting.

Download the Deloitte report