OCC Consumer Assistance
Process Is Similar to That of Other Regulators but Could Be Improved by Enhanced Outreach Gao ID: GAO-06-293 February 23, 2006In January 2004, the Office of the Comptroller of the Currency (OCC)--the federal regulator of national banks--issued rules concerning the extent to which federal law preempts state and local banking laws. Some state officials and consumer groups expressed concerns about a perceived loss of consumer protection. GAO identified (1) how OCC's complaint process compares with that of other federal bank regulators, (2) how complaint information informs OCC's supervision of national banks, and (3) issues that consumer advocates and state officials have raised about OCC's consumer protection efforts and OCC's responses to the issues.
Overall, OCC's process for handling consumer complaints--carried out primarily by its Customer Assistance Group (CAG)--is similar to that of the other three federal bank regulators. However, unlike two of them, OCC lacks a mechanism to gather feedback from consumers it assists that could help it and the banks improve service to consumers. All of the regulators resolve the majority of complaints by providing or clarifying information for bank customers; less frequently, the regulators investigate and determine that a bank or customer erred. OCC annually handles more complaints than the other regulators, likely reflecting its position as the supervisor of banks with the majority of the nation's bank assets. OCC's complaint volume has not increased appreciably since it issued the preemption rules. OCC, in accordance with federal requirements for agencies to measure how they are fulfilling goals related to serving the public, measures the percentage of complaints it resolves within 60 days, a target other federal bank regulators also use. In reporting its performance, however, OCC includes data on its response to consumers' inquiries, which typically take less time, thereby overstating its performance on timeliness of responses to complaints. OCC's bank examiners use consumer complaint information collected by CAG to plan or adjust examinations. CAG staff and examiners communicate regularly regarding specific complaints or complaint volume and coordinate these efforts to provide consistent messages when discussing consumer-related issues with bank officials. In addition, complaint data inform OCC policy guidance to banks, often addressing potential compliance and safety and soundness risks banks face. CAG also provides feedback to banks, focusing on complaint trends and potential risks that may impact the banks' compliance with consumer protection laws or other issues. Many of the state officials and consumer advocates GAO contacted during visits to four states, as well as some representatives of national organizations, nevertheless remain concerned about OCC's commitment and capacity to address consumer complaints--especially given their perception that the rules effectively ended protections provided by state laws and processes. Specific concerns these officials cited include an inability to obtain information on complaint outcomes, the fact that OCC handles complaints from a single location, and the adequacy of CAG's resources. OCC has taken actions addressing some of these concerns. The agency views itself as a neutral arbiter and continues to provide an avenue for consumers to file complaints related to national banks. OCC recently hired additional CAG staff and has begun working with a third-party vendor to expand telephone service from 7 to 12 hours a day. GAO noted that some officials and advocates contacted were unaware of OCC's process for handling consumer complaints and the assistance it can provide.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-293, OCC Consumer Assistance: Process Is Similar to That of Other Regulators but Could Be Improved by Enhanced Outreach
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Report to the Subcommittee on Oversight and Investigations, Committee
on Financial Services, House of Representatives:
February 2006:
OCC Consumer Assistance:
Process Is Similar to That of Other Regulators but Could Be Improved by
Enhanced Outreach:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-293]:
GAO Highlights:
Highlights of GAO-06-293, a report to the Subcommittee on Oversight and
Investigations, Committee on Financial Services, House of
Representatives:
Why GAO Did This Study:
In January 2004, the Office of the Comptroller of the Currency
(OCC)”the federal regulator of national banks”issued rules concerning
the extent to which federal law preempts state and local banking laws.
Some state officials and consumer groups expressed concerns about a
perceived loss of consumer protection. GAO identified (1) how OCC‘s
complaint process compares with that of other federal bank regulators,
(2) how complaint information informs OCC‘s supervision of national
banks, and (3) issues that consumer advocates and state officials have
raised about OCC‘s consumer protection efforts and OCC‘s responses to
the issues.
What GAO Found:
Overall, OCC‘s process for handling consumer complaints”carried out
primarily by its Customer Assistance Group (CAG)”is similar to that of
the other three federal bank regulators. However, unlike two of them,
OCC lacks a mechanism to gather feedback from consumers it assists that
could help it and the banks improve service to consumers. All of the
regulators resolve the majority of complaints by providing or
clarifying information for bank customers; less frequently, the
regulators investigate and determine that a bank or customer erred. OCC
annually handles more complaints than the other regulators, likely
reflecting its position as the supervisor of banks with the majority of
the nation‘s bank assets. OCC‘s complaint volume has not increased
appreciably since it issued the preemption rules. OCC, in accordance
with federal requirements for agencies to measure how they are
fulfilling goals related to serving the public, measures the percentage
of complaints it resolves within 60 days, a target other federal bank
regulators also use. In reporting its performance, however, OCC
includes data on its response to consumers‘ inquiries, which typically
take less time, thereby overstating its performance on timeliness of
responses to complaints.
OCC‘s bank examiners use consumer complaint information collected by
CAG to plan or adjust examinations. CAG staff and examiners communicate
regularly regarding specific complaints or complaint volume and
coordinate these efforts to provide consistent messages when discussing
consumer-related issues with bank officials. In addition, complaint
data inform OCC policy guidance to banks, often addressing potential
compliance and safety and soundness risks banks face. CAG also provides
feedback to banks, focusing on complaint trends and potential risks
that may impact the banks‘ compliance with consumer protection laws or
other issues.
Many of the state officials and consumer advocates GAO contacted during
visits to four states, as well as some representatives of national
organizations, nevertheless remain concerned about OCC‘s commitment and
capacity to address consumer complaints”especially given their
perception that the rules effectively ended protections provided by
state laws and processes. Specific concerns these officials cited
include an inability to obtain information on complaint outcomes, the
fact that OCC handles complaints from a single location, and the
adequacy of CAG‘s resources. OCC has taken actions addressing some of
these concerns. The agency views itself as a neutral arbiter and
continues to provide an avenue for consumers to file complaints related
to national banks. OCC recently hired additional CAG staff and has
begun working with a third-party vendor to expand telephone service
from 7 to 12 hours a day. GAO noted that some officials and advocates
contacted were unaware of OCC‘s process for handling consumer
complaints and the assistance it can provide.
What GAO Recommends:
GAO recommends that OCC (1) measure the satisfaction of consumers it
assists; (2) revise the way it measures and reports on its timeliness
in resolving consumer complaints; and (3) better inform the public,
state officials, and others of its role in handling consumer questions
and complaints.
OCC agreed with our conclusions and recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-06-293.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact David G. Wood at (202)
512-6878 or woodd@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
OCC's Handling of Consumer Complaints Is Similar to That of Other
Regulators:
CAG's Consumer Complaint Data Inform OCC's Bank Supervisory Activities:
Despite OCC Efforts, State Officials and Consumer Advocates Still Have
Concerns About OCC's Commitment and Capacity to Address Consumer
Complaints:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Office of the Comptroller of the
Currency:
Appendix III: GAO Contact and Staff Acknowledgments:
Figures:
Figure 1: Consumer Complaint Processes of Selected Banking Regulators:
Figure 2: Complaint Resolutions of Selected Federal Regulators:
Figure 3: Number of Complaints Per Billion Dollars in Assets under
Supervision of Selected Federal Regulators:
Abbreviations:
CAESAR: Complaint Analysis Evaluation System and Reports:
CAG: Customer Assistance Group:
CCS: Consumer Complaint System:
CSBS: Conference of State Bank Supervisors:
FDIC: Federal Deposit Insurance Corporation:
GPRA: Government Performance and Results Act of 1993:
MOU: Memorandum of Understanding:
NAAG: National Association of Attorneys General:
OCC: Office of the Comptroller of the Currency:
OTS: Office of Thrift Supervision:
STARS: Specialized Tracking and Reporting System:
Letter February 23, 2006:
The Honorable Sue W. Kelly:
Chairwoman:
The Honorable Luis V. Gutierrez:
Ranking Minority Member:
Subcommittee on Oversight and Investigations:
Committee on Financial Services:
House of Representatives:
In January 2004, the Treasury Department's Office of the Comptroller of
the Currency (OCC), which supervises federally chartered "national"
banks, issued two final rules, the bank activities rule and the
visitorial powers rule (commonly known as the "preemption rules"). The
bank activities rule addressed the applicability of certain types of
state laws to lending, deposit-taking, and other federally authorized
activities of national banks. The visitorial powers rule addressed
OCC's view of its authority under federal law to inspect, examine,
supervise, and regulate the affairs of national banks. Some state
officials, Members of Congress, and consumer groups opposed the rules
because of what they viewed as potentially adverse affects on the dual
banking system--which encompasses both national and state-chartered
banks--and on consumer protection. In particular, state attorneys
general, state banking departments and consumer advocates expressed
doubts about OCC's ability or inclination--as the sole regulator of
national banks and their operating subsidiaries--to adequately protect
consumers.
In addition to OCC, the Federal Reserve System (Federal Reserve)--
including the Board of Governors and the 12 Federal Reserve Banks--the
Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift
Supervision (OTS)[Footnote 1] are the primary federal regulators of
banks. For commercial and savings banks with state bank charters,
states charter the entity and have supervisory responsibilities, while
the Federal Reserve or FDIC serve as the primary federal supervisor for
these banks. In the National Bank Act, the Congress created OCC to
supervise national banks.[Footnote 2] In its capacity as the supervisor
of national banks, OCC issues regulations, policies, and
interpretations to establish standards, define acceptable practices,
provide guidance on risks, and prohibit or restrict practices. Under
the Federal Trade Commission Act, OCC is charged with protecting
consumers from unlawful and deceptive practices by national banks. One
indicator of potential consumer protection issues is consumer
complaints that OCC receives and their resolution. The main division
within OCC tasked with handling consumer complaints is the Customer
Assistance Group (CAG), located in Houston, Texas.
In your letter, you requested that we review OCC's rulemaking process
for promulgating the preemption rules, OCC's process and capacity to
handle consumer complaints, and the impact and the potential impact of
the rules on the dual banking system and consumer protection. On
October 17, 2005, we provided you with a report on the rulemaking
process.[Footnote 3] This report focuses on OCC's process and capacity
to handle consumer complaints. Specifically, the report identifies (1)
how OCC's consumer complaint process and its disposition of complaints
compare with those of other federal bank regulators, (2) how OCC's
complaint process relates to the supervision of national banks, and (3)
issues that consumer advocates and state officials have raised about
OCC in relation to consumer protection and OCC's responses to these
issues. We will soon provide you with a separate report that discusses
the impact of the rulemaking on the dual banking system and consumer
protection.
To examine how OCC handles complaints and how its consumer complaint
process and disposition of complaints compare with those of other bank
regulators, we interviewed OCC officials, as well as their counterparts
at the Federal Reserve, FDIC, and OTS. In addition, we analyzed OCC's
consumer complaint policies and procedures. We visited the CAG office
in Houston and observed its work, and we reviewed a nonprobability
sample of complaint case files to understand the different types of
complaints and outcomes. We also obtained and analyzed data on consumer
complaints from the four federal bank regulators covering calendar
years 2000 to 2004 to determine the number and types of complaints, as
well as the nature of the outcomes for consumers, and how many
complaints were resolved within the regulators' required time frames.
To determine how OCC's complaint process relates to the supervision of
national banks, we interviewed OCC and bank officials. We also analyzed
documents to identify how, and the extent to which, bank officials and
OCC examiners use consumer complaint information in planning and
implementing supervisory activities, including policies and guidance.
To identify issues raised by consumer advocates and state officials
about OCC and its role in consumer protection, we conducted site visits
between March and August 2005, in four states: California, Georgia, New
York, and North Carolina. We selected these locations based on their
experience with state consumer protection laws. The site visits
included interviews of state attorneys general, banking regulators,
banking officials, and local consumer advocate groups, as well as
analysis of relevant documents. We also interviewed state attorneys
general and banking regulators in Iowa and Idaho by telephone. We
interviewed representatives of national consumer groups and trade
groups for state officials--banking regulators and states' attorneys
general--in Washington, D.C. We conducted our audit work in the
previously mentioned four states, in addition to Texas and Washington,
D.C., from October 2004 through December 2005 in accordance with
generally accepted government auditing standards. Appendix I provides a
detailed description of our scope and methodology.
Results in Brief:
OCC's policies and procedures for handling and resolving consumer
complaints are similar to those of the other federal regulators. All of
the regulators follow the same general process when handling consumer
complaints, and all claim to take a neutral position regarding
consumers and banks that they regulate. However, OCC differs from some
of its federal counterparts in that it does not have a customer
feedback mechanism as part of its consumer complaint process. OCC, like
the other federal bank regulators, resolves most complaints it receives
by providing information to consumers. This can include clarifying
consumers' misunderstandings, referring consumers to other regulators,
or advising the consumers to seek legal counsel when their complaint
concerns a factual dispute that only a court can resolve. Less
frequently, regulators determine that specific errors or wrongdoings
have occurred. The volume of complaints OCC handles annually is greater
than that of the other federal bank regulators, likely reflecting its
position as the supervisor of banks that account for the majority of
the nation's bank assets. OCC's total volume of complaints has
generally decreased over the past 5 years and has not increased
appreciably since OCC issued the preemption rules. OCC, like other
federal agencies, is required to measure its performance toward
achieving goals related to services it provides. For example, all of
the federal regulators strive to resolve consumers' complaints within
similar time frames, usually 60 days. In reporting its performance
against its timeliness goals, OCC has overstated the agency's
percentage of complaints addressed within the 60-day target because it
combined consumer inquiries, which typically require less time, with
complaints in this measurement.
OCC uses consumer complaint data collected by CAG (1) to assess risks
and identify potential safety, soundness, or compliance issues at
banks; (2) to provide feedback to banks on complaint trends; (3) and to
inform policy guidance for the banks it supervises. OCC's bank
examiners use consumer complaint information to focus examinations they
are planning or to alter examinations in progress. Examiners review
data CAG has collected on consumer complaints to aid them in
determining the risks a bank may face and the appropriate scope of
their examination. For example, because of complaints about a
particular bank loan product, examiners may--in addition to reviewing
the bank's written policies regarding that product--examine a sample of
loan files. CAG also often provides OCC policy staff with summaries of
consumer complaint information, which influences compliance policy
guidance that OCC provides in advisory letters to banks. Finally, OCC
also uses CAG's complaint data to provide feedback to banks, focusing
on potential risk issues that may affect the banks' compliance with
consumer protection laws and/or other risks. CAG officials said that
they meet annually with the 10 banks having the highest complaint
volumes during the previous calendar year. In calendar year 2004, such
meetings would have covered the national banks responsible for about 81
percent of the total complaint volume.
Many of the state officials and advocates with whom we spoke,
nevertheless, continue to be concerned about OCC's commitment and
capacity to address consumer complaints, especially given their
perception that the effect of the rules is a loss of protection
provided by state laws and processes. While OCC has taken some action
designed to increase consumer knowledge about its consumer assistance
services, consumer groups and attorneys general assert that OCC is
unwilling to share information on complaint outcomes, and expressed
concern about OCC's capacity to adequately serve consumers nationwide,
particularly given CAG's single centralized location. Consumer
advocates see themselves as working to advance the interest of their
clients, while OCC or CAG, defines itself as a neutral arbiter.
However, some consumer advocates and some state officials see OCC as
pro-bank. Some advocates with whom we spoke were unclear about how the
OCC processes complaints through CAG and what assistance it can provide
consumers. OCC has taken steps aimed at better informing the public
about its services, such as revising a consumer complaint brochure. OCC
cited privacy concerns as limiting its ability to share information
about the outcome of complaints, but it drafted a Memorandum of
Understanding in an effort to facilitate sharing information with state
agencies. However, state officials with whom we spoke generally viewed
it as an arrangement essentially favoring OCC; and, according to OCC
officials, only one state official signed the memorandum. OCC revised
the draft memorandum in an attempt to address those concerns, however,
no additional state officials were willing to enter into the
memorandum. Many of the consumer groups with whom we spoke viewed CAG's
centralized location as a shortcoming because CAG staff, they said,
could not be familiar with schemes or problem institutions in local
areas. According to OCC, CAG operations were centralized in Houston
because it offers efficiency advantages and facilitates identifying
national trends and potential problems. Finally, some consumer groups
and state officials questioned OCC's complaint-handling capacity,
stating that the 2004 preemption rules could eventually increase the
number of complaints OCC receives. CAG data show that the total number
of complaints, in any given year, received from state offices--
including banking departments and states' attorneys generals--is a
relatively small percentage of the total number of complaints;
therefore, any increase in referrals to OCC from those offices might
not have a dramatic effect on total overall volume. To accommodate
expected increases in telephone calls due to growth in the banks under
its supervision, OCC has hired more CAG staff and has begun working
with a third-party vendor to expand CAG's telephone service from 7 to
12 hours a day.
This report makes recommendations to the Comptroller of the Currency
that are designed to improve OCC's process for handling consumer
complaints and inquiries as well as its efforts to inform, educate, and
serve bank customers. We provided a draft of this report to OCC for
review and comment. In written comments, the Comptroller of the
Currency concurred with our recommendations (see app. II).
Specifically, OCC agreed to develop and implement a customer feedback
mechanism to receive input and measure satisfaction of those who have
used CAG services. OCC also agreed to revise the data it publicly
reports on timeliness to reflect complaints resolved within the 60-day
goal separately from data reported on inquiries. Finally, OCC agreed
with our recommendation that it develop and implement a comprehensive
plan to inform bank customers, consumer advocates, state attorneys
general, and others of its role in handling consumer inquiries or
complaints about national banks. OCC also provided technical comments
that we incorporated, as appropriate.
Background:
OCC's mission focuses on the chartering and oversight of national banks
to ensure their safety and soundness, on fair access to financial
services, and on fair treatment of bank customers. As of March 2005,
the assets of the banks that OCC supervises accounted for approximately
67 percent--about $5.8 trillion--of assets in all U.S. commercial
banks. Among the more than 1,800 banks OCC supervises are 14 of the top-
20 commercial banks in asset size.[Footnote 4]
OCC groups its regulatory responsibilities into three program areas:
chartering, regulation, and supervision. Chartering includes not only
reviewing and approving applications for charters but also reviewing
and approving proposed mergers, acquisitions, and reorganizations.
Regulation includes establishing written regulations, policies,
operating guidance, interpretations, and examination policies and
handbooks. Additionally, in its most recent strategic plan, OCC
identified its regulatory approach as one that would ensure that
national banks operated in a "flexible legal and regulatory framework"
that enables them to provide a "full competitive array" of financial
services.
According to OCC's latest strategic plan, OCC's supervision program
consists of ongoing supervisory and enforcement activities undertaken
to ensure that each national bank is operating in a safe and sound
manner and is complying with applicable laws, rules, and regulations
concerning the bank, customers, and communities it serves. OCC's
supervisory activities include examinations and enforcement actions,
dispute resolution, ongoing monitoring of banks, and analysis of
systemic risk and market trends. OCC policies establish a minimum level
of activity that must occur during the supervisory cycle, during which
time examiners assess the overall condition of the bank in the areas of
capital adequacy, asset quality, management, earnings, liquidity, and
sensitivity to market risks. Such examinations are generally referred
to as "safety and soundness" examinations. In large banks, much of this
work is conducted throughout the year by examiners assessing specific
aspects of a bank's management and operations, while in the smaller
banks, the on-site examination generally occurs at one time during a 12-
or 18-month period.[Footnote 5] OCC has a team of full-time, on-site
examiners who are located at large banks throughout the year and who
conduct ongoing monitoring and examinations. In addition to the safety
and soundness examinations, OCC conducts compliance examinations that
assess the bank's compliance with laws intended to protect or assist
consumers, such as laws related to disclosure of loan terms, fair
lending, equal credit opportunity, and others. Consumer compliance
examinations are conducted on a continuous 3-year cycle in large banks
and at least every 36 months at small banks.
OCC traditionally has issued opinions on a case-by-case basis, rather
than rules or regulations, on whether the National Bank Act preempts
state laws that impose standards or restrictions on the business of
national banks. In contrast, on January 13, 2004, OCC issued the two
preemption rules on the extent to which the National Bank Act preempts
the application of state and local laws to national banks and their
operating subsidiaries. The rules and the manner in which OCC
promulgated them generated considerable controversy and debate,
including questions about OCC's authority to issue the rules. According
to OCC, the two rules "codified" judicial decisions and OCC opinions on
preemption under the National Bank Act by making them generally
applicable and clarified certain issues. The visitorial powers rule, as
stated by OCC, clarifies that (1) federal law commits the supervision
of national banks' banking activities exclusively to OCC (except where
federal law provides otherwise) and that (2) states may not use
judicial actions as an indirect means of regulating those
activities.[Footnote 6] The banking activities rule preempts categories
of state laws that relate to bank activities and operations, describes
the test for preemption that OCC will apply to state laws that do not
fall within the identified categories, and lists certain types of state
laws that are not preempted.[Footnote 7] In proposing the banking
activities rule, OCC stated that it needed to provide timely and more
comprehensive standards about the applicability of state laws to
lending, deposit taking, and other authorized activities of national
banks because of the number and significance of questions banks were
posing about preemption in those areas.[Footnote 8]
However, opponents such as consumer groups and state legislators feared
that the preemption of state law, particularly concerning predatory
lending practices, would weaken consumer protections. They noted, in
commenting on the preemption rules, that the rules would prevent states
from regulating operating subsidiaries of national banks and would
diminish the states' ability to protect their citizens. Prior to OCC's
issuance of the rules, consumers who had complaints with national banks
or their operating subsidiaries sometimes filed complaints with state
officials who tried to resolve them, although consumers could have
filed such complaints with OCC, and many did. Since OCC issued the
rules, some state officials refer all complaints involving national
banks to OCC while others, through informal arrangements, still try to
assist consumers. It is too soon to assess the practical effect of the
rules on a consumer who has a complaint with a national bank, given the
short time frame and legal questions raised by opponents to the rules.
We address some facets of the rules' practical effect on consumers in
this report and will address others in our subsequent report on the
impact of the rules on the dual banking system and consumer protection.
One of OCC's strategic goals is to ensure all customers have fair
access to financial services and are treated fairly. The agency's
strategic plan lists objectives and strategies to achieve this goal,
including fostering fair treatment through OCC guidance and supervisory
enforcement actions where appropriate, and providing an avenue for
customers of national banks to resolve complaints. The main division
within OCC tasked with handling consumer complaints is CAG. This group
is a part of OCC's Office of the Ombudsman, a distinct division of OCC
that operates independently of the agency's bank supervision function.
In addition to CAG, the Office of the Ombudsman oversees (1) the
national bank appeals process--a forum by which banks may appeal the
results of OCC's supervisory examinations and ratings and (2) a
postexamination questionnaire to obtain feedback from banks. The
Ombudsman reports directly to the Comptroller and is a member of OCC
senior management team (the Executive Committee) that includes the
Chief Counsel, the Chief National Bank Examiner, and the Senior Deputy
Comptrollers for Large Bank and Mid-size/Community Bank Supervision.
CAG's mission is to ensure that bank customers receive fair treatment
in resolving their complaints with national banks. According to the
2004 Report of the Ombudsman, CAG carries out its mission by providing
services to three constituent groups: (1) customers of national banks-
-by providing a venue to resolve complaints, (2) OCC bank supervisors-
-by alerting supervisory staff of emerging problems that may result in
the development of policy guidance or enforcement action, and (3)
national bank managers--by providing a comprehensive analysis of
complaint volumes and trends. The Deputy Ombudsman manages and directs
CAG operations. Since 1999, CAG has employed about 40 full and part-
time staff, and it had 49 staff in 2005. The annual operating and
personnel budget attributable to CAG operations more than doubled from
$2.6 million to $5.4 million between 1999 and 2005. According to our
analysis of CAG budget and staffing data, the budget's growth has
outpaced that of staff due to the design and implementation of its
computer network.
OCC's Handling of Consumer Complaints Is Similar to That of Other
Regulators:
OCC's process for handling and resolving consumer complaints is similar
to that of the other three federal bank regulators. We identified six
distinct steps that all of the federal regulators follow when
processing consumer complaints. Unlike two of the federal regulators,
OCC lacks a process for collecting feedback from consumers it assists.
OCC and the other federal regulators also resolve complaints in a
similar fashion, with the outcomes generally falling into the same
categories. While the most common resolution of complaints was that of
the regulator providing the consumer additional information, regulators
also consider a complaint resolved if it is withdrawn or tabled due to
litigation, or if the regulator determines that the bank did, or did
not, make an error. The volume of complaints OCC handles is generally
in proportion to the assets of the national banks it supervises. From
2000 through 2004, OCC handled on average more than twice as many
complaints as the other regulators combined. OCC and other federal
regulators have similar goals in responding to consumer complaints in a
timely fashion. However, by combining consumer inquiries and consumer
complaints in determining whether it met its timeliness goals, OCC
overstated its performance on these goals.
OCC and Other Federal Regulators Follow the Same General Process in
Resolving Consumer Complaints:
All four federal regulators we reviewed take similar approaches in
processing consumer complaints about banks they supervise.[Footnote 9]
The regulators define their role as a neutral arbiter between consumers
and the banks they regulate when processing complaints. For instance,
the 2004 Report of the Ombudsman states that CAG's role is to be
neutral in answering questions and offering guidance on applicable
banking laws, regulations, and practices and that it should not be an
advocate for either the bank or consumers. As illustrated in figure 1,
each regulator generally follows six distinct steps in processing a
complaint:
* The consumer submits the complaint;
* The regulator determines if the bank is under its supervision;
* The regulator forwards the complaint to the bank;
* The bank sends a response to the regulator;
* The regulator examines the response to see if it completely addresses
the consumer's complaint; and:
* The regulator notifies consumer of complaint's outcome.
Figure 1: Consumer Complaint Processes of Selected Banking Regulators:
[See PDF for image]
[End of figure]
Although consumers may initially contact OCC or other regulators about
their complaints via various methods, such as telephone, mail, fax, or,
in some cases, E-mail, regulators normally do not formally accept a
complaint until they have received a signed complaint form or
letter.[Footnote 10] After a regulator receives a formal complaint, it
must then determine if the bank involved is under its jurisdiction. If
not, then the regulator determines who is the appropriate regulator and
provides the consumer with contact information or forwards the
complaint. Once the appropriate regulator receives the complaint, it
forwards the complaint to the bank. OCC uses a secure Web-enabled
application--CAGNet[Footnote 11]--that permits it and participating
national banks to send and receive documents and images electronically.
Banks have a set period of time to respond to a complaint, though the
period varies among regulators. Among the four federal regulators, the
time allowed for initial response ranges from 10 to 20 days, with OCC
requesting a response within 10 days.[Footnote 12] All of the
regulators permit the banks to request additional time to review the
complaint or compile necessary information. After completing its review
of the complaint, the bank sends a response to the regulator. Often,
the bank responds concurrently to the consumer, since the consumer is
the bank's customer. After receiving the bank's response, each
regulator examines it to determine if the consumer's complaint has been
completely and appropriately addressed. At this step, the regulator
examines the complaint and response to determine if any additional
follow-up is necessary by its supervisory or legal staff. If it is not
satisfied with the bank's response, then the regulator requests
additional information or clarification from the bank. Once satisfied
with the bank's response, the regulator notifies the consumer about the
outcome of the complaint.[Footnote 13]
OCC Does Not Seek Feedback from Consumers on Services Provided:
Of the four federal regulators, two offer consumers a method for
providing feedback on the complaint process once the regulator has
notified the consumer of the outcome. The Federal Reserve and FDIC
offer consumers a feedback survey once their complaints have been
resolved. The Federal Reserve mails a satisfaction survey, while FDIC
directs consumers to a Web-based survey. Federal Reserve officials
explained that the Federal Reserve has surveyed consumers since the mid
1980s and can link individual surveys back to original complaints, but
the agency has not analyzed the aggregate data or used any findings
from the surveys to modify its complaint-handling process. However,
Federal Reserve officials explained that sometimes specific survey
results are shared with staff who worked on the complaint or with
management to better target staff training.
Neither OCC nor OTS has any formal mechanism to measure satisfaction
with the consumer complaint process (though officials from both
agencies explained that they receive many letters expressing both
satisfaction and disappointment with their services). OTS officials
explained that the small number of complaints they receive does not
warrant the resources necessary to implement a customer satisfaction
survey.
Like other federal agencies, OCC measures and reports on certain
aspects of its performance in accordance with the Government
Performance and Results Act of 1993 (GPRA).[Footnote 14] According to
the 2004 Report of the Ombudsman, OCC measures the effectiveness of its
supervisory process through an examination questionnaire, which is
provided to all national banks at the conclusion of their supervisory
cycles. The questionnaire is designed to gather direct and timely
feedback from banks on OCC's supervisory efforts. While the
questionnaire is a useful step to help OCC assess its performance
regarding its national bank clients, OCC does not have a comparable
tool to gather information regarding its performance in assisting the
consumers of national banks. Collecting information about how
individual consumers assess the assistance CAG provides in answering
their questions or helping resolve a complaint with their bank could be
equally helpful for OCC to measure its performance in ensuring fair
treatment of bank customers. OCC officials stated that they understand
the value of measuring the satisfaction of consumers who they assist
and are evaluating several different options for obtaining consumer
feedback.
Outcomes of Complaints Handled by All of the Federal Regulators Fall
into the Same General Categories:
OCC and the other three federal regulators offer consumers similar
resolutions in their final responses to complaints. In analyzing the
complaint data across the four federal regulators, we found that the
regulators, after investigating complaints, generally resolved them in
one of four ways, as shown in order of decreasing frequency: (1)
providing the consumer with additional information without any
determination of error, (2) withdrawing the complaint or tabling
complaints already in litigation, (3) finding that the bank had not
made an error, and (4) finding that the bank had made an
error.[Footnote 15]
Regulators Provided Consumers Additional Information:
Between 2000 and 2004, the most common resolution of complaints handled
by all federal regulators was that consumers were provided more in-
depth or specific information about their complaints (see fig. 2).
Figure 2: Complaint Resolutions of Selected Federal Regulators:
[See PDF for image]
Note: Columns may not add to 100 due to rounding. Bars without numbers
are less than 4 percent.
[End of figure]
In these cases, the regulator's investigation revealed that the
consumer required additional information to understand his or her
situation, and the regulator made no determination of whether the bank
or the consumer had made any error. For example:
* The regulator might explain to the consumer that the complaint
involves a contractual dispute that is better handled by a court. For
instance, in one case, OCC informed a consumer to consider seeking
legal counsel since the matter between the bank and the consumer
involved a factual dispute concerning the interest rate on a credit
card. The bank, based on its review of credit information, raised the
interest rate on the consumer's credit card after providing the
consumer adequate notice about the impending change to the terms of
credit, which included information on how to opt out of the credit card
if the consumer did not agree to the new terms. The consumer complained
that the bank failed to provide adequate notice and, thus, improperly
raised the interest rate. After reviewing the relevant documentation
from both the consumer and bank, OCC informed the consumer that since
the bank claimed to have sent the proper notice to the consumer and the
consumer denied receiving the notice, the agency could not judge which
party was correct. Therefore, OCC counseled the consumer to consider
taking legal action should the consumer want to pursue the matter
further.
* The regulator may determine that rather than wrongdoing, there was a
miscommunication between the bank and its customer.[Footnote 16] For
example, in one case involving a checking account, a bank charged a
maintenance fee to an account with a zero balance. The checking account
had a minimum monthly maintenance fee, which the bank deducted
automatically from the checking account. When the bank charged the
monthly maintenance fee and the balance became negative, the bank
charged an overdraft fee. The consumer understood that overdraft
protection should cover the maintenance fee but did not recognize that
overdraft protection would result in an additional fee. After OCC
forwarded the complaint to the bank, the bank decided to no longer hold
the consumer liable for the delinquent monthly maintenance and
overdraft fees that accumulated. OCC viewed the matter as
miscommunication between the bank and consumer.
* The regulator may determine that the complaint should be forwarded to
a different regulator. When appropriate, all four federal regulators
directly refer consumers, or forward their complaints, to other federal
and state agencies. We found that three federal regulators--the Federal
Reserve, FDIC, and OCC--referred a considerable number of consumers who
contacted them to another federal agency to have their complaints or
inquiries addressed. For example, from 2000 through 2004, FDIC referred
about 40 percent of the consumers who contacted them with a complaint
to another federal agency; the Federal Reserve and OTS referred about
53 percent and 3 percent, respectively. OCC, during this same period,
referred approximately 38 percent of its callers to another federal
agency.[Footnote 17]
Complaint Is Considered Withdrawn or Tabled Due to Litigation:
For OCC, the second most frequent type of complaint resolution was
"withdrawn"[Footnote 18] or "complaint in litigation," while it was the
least common for the Federal Reserve and OTS and the third most common
for FDIC.[Footnote 19] These are complaints that, by and large, the
regulator is not able to address. None of the federal regulators
address complaints that they find are already involved in any legal
proceeding at the time the consumer contacts them. In the case of OCC,
one of the major reasons for complaints being withdrawn, according to
OCC officials, is that the consumer does not send in the requested
information, such as the signed complaint form or letter OCC requires
before it begins any complaint investigation. As shown in figure 2, in
2000, OCC closed about 17 percent of complaint cases because it did not
receive requested information or the complaint was in litigation, while
in 2004, OCC closed nearly 37 percent of these cases for the same
reasons. One reason for this increase, OCC officials explained, is that
in mid-2000 they made changes to the database that tracks complaints.
In particular, after the changes, the database coded complaints as
"withdrawn" when the regulator did not receive information it requested
from a consumer within 30 days. Previously, this type of complaint
remained opened indefinitely or until the consumer provided the
information. OCC's policy is to reopen any complaint cases if the
consumer sends in the requested information after 60 days from the day
OCC made the request for additional information. Since OCC does not
open a new case in such instances, this policy negatively impacts OCC's
average in meeting its timeliness goals for resolving complaints.
According to OCC officials, another reason for this increase is OCC's
policy of encouraging consumers to contact the bank prior to filing a
complaint with OCC.[Footnote 20] It is typical for the staff to provide
a case number and complaint form to the consumer to use if he or she is
unsuccessful in resolving the problem with the bank. OCC officials
explained that in many instances they assume that the bank and the
consumer has worked the problem out since the consumer never sends in a
completed complaint form. In these instances, OCC codes the complaint
as withdrawn because the consumer did not submit a completed complaint
form. OCC officials explained that this coding procedure has an
advantage. Although the complaint has been withdrawn, the information
that the consumer provided through the initial contact is available to
examination staff as well as to the bank, and it provides insight to
potential issues at the bank.
Regulators Determine That Bank Was Not in Error:
This category of complaint resolution was third for OCC in terms of
frequency, while it was second for the other regulators. The regulators
frequently resolve cases by finding that banks did nothing wrong, and
the consumers do not have legitimate complaints, that is, the bank was
correct. For example, in one case, OCC informed the consumer that an
incorrectly completed deposit slip led the consumer to believe the bank
improperly deducted funds from the consumer's checking account. OCC had
the bank provide the consumer copies of the deposit slip and checks
recorded on the slip, which showed the consumer inaccurately
transcribing the amounts from the checks to the deposit slip.
Regulators Determine That Bank Was in Error:
"Bank Made an Error" was the least common outcome for complaints
resolved by OCC and FDIC and next-to-least common for the other two
regulators. The bank error category includes both regulatory violations
and problems consumers had with the bank's customer service. In these
instances, the regulators determine that the bank did make an error in
how it provided its products and services to the consumer. For example,
in one case, OCC determined that a bank did not properly respond when
fraudulent charges were identified on a consumer's credit card account,
and the bank did not reverse them. The complaint was resolved when the
bank reimbursed the consumer's credit card account.
OCC Handles a Greater Volume of Complaints Than the Other Bank
Regulators:
Likely reflecting the greater volume of bank assets under its
supervision, OCC handled more complaints from 2000 through 2004 than
FDIC, OTS, and the Federal Reserve combined. During this time period
OCC processed, on average, 10 complaints for every billion dollars
under its supervision, while FDIC averaged 6 complaints, the Federal
Reserve 3 complaints, and OTS 5 complaints (see fig. 3).[Footnote 21]
Figure 3: Number of Complaints Per Billion Dollars in Assets under
Supervision of Selected Federal Regulators:
[See PDF for image]
[End of figure]
From 2000 through 2004, credit cards were the most common product
involved in complaints addressed by OCC, FDIC, and the Federal
Reserve.[Footnote 22] According to officials from OCC and FDIC,
complaints about credit cards will continue to remain high because
consumers have multiple credit cards and use them frequently. During
this same time period, the assets of banks under OCC's supervision that
issued credit cards averaged $221 billion, while the total assets of
the banks under the supervision of the other three regulators averaged
$87 billion.[Footnote 23] Given these numbers, it would appear that the
volume of complaints OCC handles is not out of proportion to the bank
assets under its supervision, especially given that OCC supervises
several banks that specialize in issuing credit cards. Although OTS
also receives complaints about credit cards, during the same time
period it received the most complaints about home mortgage loans. This
is not exceptional, given that mortgage lending is a leading activity
of the thrifts and savings banks OTS supervises.
Federal Regulators Have Similar Timeliness Goals, but OCC Overstated
Its Timeliness in Resolving Complaints by Including Inquiries in Its
Calculation:
Consistent with GPRA and its implementing guidance, OCC provides
information in its annual report that includes performance measures,
workload indicators, customer service standards, and the results
achieved during the fiscal year. OCC aims to resolve complaints within
60 days. The Federal Reserve, FDIC, and OTS also have a goal of
resolving complaints within 60 days. In fiscal years 2003 and 2004,
OCC's target was to close 80 percent of all complaints within 60
calendar days of receipt. According to its 2003 annual report, OCC
exceeded its target by closing 87 percent of complaints within 60 days.
However, our analysis of calendar year data that OCC provided to us
shows that only about 66 percent of complaints were closed within 60
days. Similarly, the 2004 annual report states that OCC closed 74
percent of complaints within the established time frame, while our
analysis of OCC's data shows that in calendar year 2004, it was
approximately 55 percent. The discrepancy between the percentages
reported in the annual reports and our analysis cannot be entirely
explained by the fact that we reviewed calendar year data and the
annual reports include fiscal year data.[Footnote 24]
OCC officials explained that the differences between its reported
figures and our analyses are the result of differences in the consumer
complaint data on which each is based. The annual reports stated that
the agency closed 69,044 complaints in 2003 and 68,104 complaints in
2004. However, these totals include inquiries that the agency handled,
not just complaints. Inquiries--which may be questions or comments
subject to an immediate, simple answer--can typically be handled at the
initial contact between the consumer and OCC, while some complaints can
take well over the 60-day time frame to investigate and resolve.
Therefore, by including both inquiries and complaints in determining
whether it met its timeliness goals, OCC overstated its performance, as
measured by the percentage of complaints resolved within the target
time frame. OCC officials explained that the data in the annual reports
were presented using the generic term "complaints" to simplify the
amount of information given to the reader.
As OCC officials explained, some complaints involve more complex
products, such as mortgages. Also, depending on the nature of the
complaint, such as allegations of fair lending abuse, some
investigations take more time. All four regulators have a percentage of
complaints that they cannot resolve within their established time
frames. OCC officials also explained that the time used in resolving
complaints is a result of how it handles consumer appeals. Since OCC
considers an appeal a reopened complaint, the start date for
calculating the number of days it takes to resolve a complaint reverts
back to the date it was originally filed with the agency. This practice
had the affect of adversely impacting the measure of OCC's timeliness
in meeting its timeliness goals.
CAG's Consumer Complaint Data Inform OCC's Bank Supervisory Activities:
According to the 2004 Report of the Ombudsman, CAG's role includes
providing information to OCC examiners and the banks to "elevate" the
issues raised by consumers and make them visible to OCC staff involved
in supervision. The complaint data CAG collects, summarizes, and
disseminates to OCC's examiners helps the examiners to identify banks,
activities, and products that require further review or investigation.
OCC supervision guidance requires examiners to consider consumer
complaint information when assessing a bank's overall compliance risk
and ratings and when scoping and conducting their examinations.
[Footnote 25]OCC guidance also requires that the banks have processes
in place to monitor and address consumer complaints.
According to compliance examiners we interviewed, the examiners learn
about complaints primarily through a Web-based application called CAG
Wizard. The application allows examiners to access near real-time
consumer complaint data. Examiners can review specific complaints,
generate standard reports or conduct customized searches of the data.
The information available to examiners includes data on all of the
banks OCC supervises, not just those where an examiner is currently
assigned. With this capability, examiners can also generate similar
reports on similar institutions. Examiners with whom we spoke said CAG
Wizard is a useful tool. They reported using the application to prepare
for an examination or when developing the annual risk assessment of the
bank. Often, the examiners compare the complaint data that banks
maintain with the data CAG provides through CAG Wizard.
OCC examiners and CAG staff also collaborate on other activities. For
example, CAG staff may alert examiners if there are certain types of
complaints that warrant further attention or if patterns emerge in the
overall complaint volume about the bank. CAG officials and OCC
examiners told us that there is an open line of communication between
their respective staffs. For example, examination staff at one national
bank undertook a specific investigation based on a complaint forwarded
from CAG. Examination staff specifically requested and reviewed
information from the bank concerning the advertising of a product and
the bank's associated fees. Examiners can also forewarn CAG staff about
any impending bank actions related to products, services, or policy
that may cause consumers to complain. For instance, the bank might be
changing the terms on a credit card product, and as such, sending a
notification to customers. Such mailings typically lead to an increase
in calls to CAG, but with forewarning from the examiners, CAG can have
more accurate information on hand to use in assisting bank customers
who call with questions.
OCC also uses consumer complaint data collected by CAG to formulate
guidance for national banks. Topics of these guidelines cover various
aspects of banking, including risks involved with using third-party
vendor partners (e.g., when a bank partners with another business to
provide a service to bank customers), predatory lending, and credit
card practices. For example, CAG received a significant number of
consumer complaints about aggressive marketing tactics and inadequate
disclosures related to credit repair products offered through third
parties. In response to the complaints received, OCC issued guidance in
2000 warning banks about risks posed to them by engaging third-party
vendors for products and services linked to the credit cards that banks
issue.[Footnote 26]
CAG provides the largest national banks with aggregate information on
the complaints about them. Also, CAG staff meets annually with bank
officials of at least the 10 banks that received the most complaints
during the previous calendar year. In 2004, the 10 banks with the most
complaints accounted for 81 percent of all the complaints that OCC
received. At these meetings, CAG officials discuss significant issues,
such as data on complaint volume and trends, comparable data for the
bank's peers and the industry, and current issues the bank should
address. Prior to these meetings CAG officials consult with examiners
on what specific issues warrant additional analysis or attention by
bank officials. According to examiners, they attend the meetings and
offer input on any specific topics CAG should highlight. Most bank
officials with whom we spoke also said that the meetings with CAG were
useful in helping them address customer satisfaction.
Despite OCC Efforts, State Officials and Consumer Advocates Still Have
Concerns About OCC's Commitment and Capacity to Address Consumer
Complaints:
Many of the state officials and advocates with whom we spoke continue
to be concerned that OCC does not have the necessary commitment or
capacity to provide consumers with sufficient protection against
violations of laws. Unlike consumer advocates and state attorneys
general, OCC defines itself as a neutral arbiter in terms of assisting
consumers. Yet state officials and consumer advocates perceive OCC as
being pro-bank, not neutral, and as such, they may hesitate to forward
complaints on behalf of their citizens or clients. Some officials were
unaware of CAG's process for handling consumer complaints; however, OCC
recently took steps to publicize its customer assistance function.
State officials were concerned about a perceived unwillingness by OCC
to share information about the outcomes of complaints. Other groups
with whom we spoke view the CAG's centralized location as a shortcoming
because CAG staff, they said, could not be familiar with current
lending practices that pose high risk to consumers or to problematic
institutions in local areas. OCC has taken some steps to provide
flexibility in operations to meet any upcoming increases in demand for
its services.[Footnote 27]
While State Officials and Advocates We Contacted Remain Concerned About
OCC's Commitment to Consumer Protection, Some Were Unaware of Its
Consumer Protection Efforts:
As we previously reported, OCC received close to 3,000 letters
commenting on the banking activities rule, with the majority of
commenters opposed to the rule and citing concerns about weakened
consumer protections.[Footnote 28] Comments from state officials argued
that a lack of state regulation would create "an enormous vacuum of
consumer protection without adequate federal regulation to fill the
gap." Many of these commenters suggested that OCC needed to do more,
not less, to protect consumers. These views were echoed by those with
whom we spoke in preparing this report, as were concerns that the
visitorial powers rule severely limits the advocates' and state
officials' abilities to assist their constituents and clients, thereby
exposing them to potential consumer protection violations. The rule,
according to OCC, clarifies that federal law commits the supervision of
national banks exclusively to OCC. Because advocates work to advance
the interests of their clients, they do not see their role being
adequately filled by OCC, or CAG, which defines itself as a neutral
arbiter. Although part of OCC's mission is to ensure fair access to
financial services and fair treatment of bank customers, the perception
remains, among the groups with whom we spoke, that OCC is "on the side"
of the banks. Some advocates with whom we spoke were unclear about how
OCC processes complaints through CAG and what assistance it can provide
consumers. Some of the state officials and advocates with whom we spoke
were unaware of the CAG, its process for responding to consumer
inquiries and complaints, or the help it can provide. Some of the state
officials and advocates with whom we spoke said that they are reluctant
to refer clients to the agency, given their level of mistrust of OCC
and lack of knowledge about its customer assistance function. However,
CAG data from November 2001 to September 2005 show referrals from all
50 state banking departments and 49 state attorneys' general offices.
OCC officials said that they have several ongoing initiatives aimed at
better informing the public about their services. For example, OCC
recently revised its consumer complaint brochure. The brochure has
"frequently asked questions" about OCC and the role it, and CAG
specifically, play in resolving consumer complaints. This new version
will be printed in Spanish and English. As of November 2005, OCC said
they had distributed a small number of brochures to each national bank.
In addition a "camera-ready" version will be made available to banks so
that they can print more copies if they choose. However, OCC officials
said they will not require the banks to display or distribute the
brochures. In addition, officials said they do not have a distribution
plan to give the brochure directly to the general public, although they
did give a small supply to the Better Business Bureaus.[Footnote 29] We
note that the information in the brochure is available on the OCC Web
site.
OCC also informs the public about CAG services and performance through
the Annual Ombudsman report. This report is available on OCC's Web site
and contains information on total case volume handled in the previous
year, as well as a general discussion about complaint volumes and
trends. Also, in 2004, OCC redesigned its Web site to enhance the
consumers' capability to access information and learn more about its
services. The redesigned Web site provides a searchable list of
national bank operating subsidiaries that do business directly with
consumers, which allows individual consumers to determine if an entity
is associated with a bank supervised by OCC. However, some of the
consumer groups with whom we spoke said that one limitation of this
list is that it does not have dates attached to the list of operating
subsidiaries indicating when they became associated with the bank,
which can be important in trying to identify the parties involved in a
transaction at a particular time. OCC officials said that they will
address any complaint brought against a national bank and its operating
subsidiaries, regardless of when the transaction took place.
OCC officials also said CAG staff are engaging in a series of outreach
meetings with state government organizations and Better Business
Bureaus.[Footnote 30] For example, in November 2004, senior CAG
officials met with one state attorney general's office to demonstrate
how OCC handles consumer complaints. That state attorney general told
us that it was clear from the meeting that the CAG officials seemed
earnest in wanting to cooperate, even though the two sides might still
disagree on the appropriate roles for OCC and the states in protecting
consumers. OCC officials said they intend to hold similar meetings with
other state attorneys general and state banking departments, although
none were planned as of November 2005. OCC staff is also engaged in
outreach efforts with the Better Business Bureaus, which includes
conference presentations, as well as meeting with several bureaus in
order to educate them on OCC's customer assistance services and to
enable OCC to better understand the nature and volume of complaints
received by the Better Business Bureaus involving national banks. In
addition, OCC officials are requesting that Better Business Bureaus
update their Web sites to include a link to OCC. Also, during fiscal
year 2005, representatives from CAG and OCC's Community Affairs office
held outreach meetings with national consumer group organizations, such
as the Consumer Federation of America, American Association of Retired
Persons, and the National Association of Consumer Agency
Administrators.
State Officials View OCC's Efforts to Share Information About Complaint
Outcomes as Unsatisfactory:
Among some of the states' attorneys general with whom we spoke, there
is the perception that OCC is not willing to cooperate in protecting
citizens, as evidenced, in part, by their perception of OCC's
unwillingness to share information on consumer complaint outcomes. Most
state attorneys general staff with whom we spoke said they are willing
to forward complaints to OCC, but they have not been receiving what
they perceive to be adequate information on the outcome of referrals.
According to OCC officials, it is agency policy to send the consumer a
letter acknowledging receipt of a complaint submitted to OCC. If a
complaint is forwarded to OCC from another agency, it is OCC's policy
to send a copy of the acknowledgment letter to the forwarding agency.
Nonetheless, some state attorneys general and other state officials
said that, in their experience, OCC does not provide any information
about the resolution of the complaints, which is what state officials
want. However, in commenting on a draft of this report, OCC officials
told us that if state officials request information on the resolution
of an individual complaint, OCC will notify them of the outcome.
Specifically, they said that an attorney from OCC's Community and
Consumer Law Division will contact the state official once a case is
closed and will discuss the case. Although it is not a written policy,
OCC officials told us these contacts are common practice.
In July 2003, OCC suggested a "Memorandum of Understanding" (MOU)
between itself and state attorneys general and other relevant state
officials that could, in OCC's words, "greatly facilitate" its ability
to provide information on the status and resolution of specific
consumer complaints and broader consumer protection matters state
officials might refer to them. In his letter prefacing the MOU, the
former Comptroller of the Currency stated that both attorneys general
and OCC "have a mutual interest in ensuring that consumers are
protected from illegal, predatory, unfair, or deceptive practices." To
that end, the Comptroller urged attorneys general to send individual
customer complaints directly to OCC. He also asked state officials to
refer concerns about broader consumer protection issues to OCC saying,
"Where you believe there is a broader issue, such as the applicability
of a particular State law to national banks generally, or if you have
information that a specific national bank is engaged in a particular
practice affecting multiple customers that is predatory, unfair or
deceptive, this information should be communicated to the OCC's Office
of Chief Counsel for coordination."
The MOU was sent to all state attorneys general as well as the National
Association of Attorneys General (NAAG) and the Conference of State
Bank Supervisors (CSBS). Some of the officials from banking departments
and the offices of attorneys general that we interviewed as well as
representatives of CSBS said they viewed OCC's proposed MOU as
unsatisfactory because, in their view, it essentially favored the OCC.
In a written response to the OCC Comptroller, declining to sign the
MOU, one state's attorney general described the proposal as one where
"states send complaints to OCC with the idea that, at some later date,
we would have the right to inquire about the results of the
'resolution' of the matter obtained by OCC." In addition, some of the
state officials with whom we spoke believed that signing the proposed
MOU would amount to a tacit agreement to the principles of the banking
activities and the visitorial powers rules.
According to OCC, states' attorneys general--in informal comments on
the proposed MOU--felt that the proposal was unilateral, imposing
certain conditions upon states that received information from OCC, but
not upon OCC when it received information from state officials. Also,
OCC noted that the proposed MOU did not provide for referrals from OCC
to state agencies of consumer complaints OCC received pertaining to
state regulated entities. Therefore, in 2004, OCC attempted to address
these concerns in a revised MOU, which it provided to CSBS and the
Chairman of the NAAG Consumer Protection Committee. According to OCC,
the revised MOU expressly says that an exchange of information does not
involve any concession of jurisdiction by either the states or by OCC
to the other. Specifically, it states,
"Nothing in this MOU is intended to or shall be construed to affect,
modify, or imply any conclusion regarding the jurisdiction or authority
of either of the agencies or affect the rights or obligations of the
agencies under existing law concerning the scope of the respective
jurisdiction of each of the agencies to supervise, examine or regulate
the regulated institutions covered by this MOU."
Only one state official signed the original 2003 Memorandum, and
according to OCC, to date, no additional state officials have signed
the 2004 version.
Others Raise Concerns About CAG's Centralized Operations, Although OCC
Cites Advantages:
Consumer groups also expressed misgivings about forwarding complaints
to OCC. Many of the groups with whom we spoke viewed CAG's centralized
location as a shortcoming because they believe that the CAG staff thus
could not be familiar with current lending practices that pose high
risk to consumers or problematic institutions in local areas. The
consumer advocates we interviewed said an in-depth understanding of
local real estate conditions was necessary to prevent predatory lending
abuses. Furthermore, they said that OCC's 60-day time frame is too long
to effectively address many of their clients' acute needs, such as when
immediate action is needed to stop a foreclosure proceeding. We note
however, that the other federal bank regulators and three of the six
state regulators with whom we spoke all have a 60-day goal for
resolving complaints.
According to OCC officials, the agency centralized its consumer
operations in Houston because it offers efficiency advantages. FDIC
officials said they are consolidating their complaint handling
operations for the same reasons. OCC examiners we interviewed also
pointed out that a central facility makes sense, given that national
banks operate across state lines and have so many customers in multiple
markets. According to CAG and bank supervision staff, funneling data
to, and analyzing it in, one location provides more potential for
seeing national trends and potential problems.
However, there are also potential drawbacks to having only one
operational facility available for any such customer function, as it
increases the likelihood that there might be disruptions in service.
For example,
during Hurricane Rita in September 2005, telephones were not staffed
for 4 days at CAG, due to the evacuation of Houston.[Footnote 31]
However, consumers were able to submit complaints by either E-mail or
fax. During that period, OCC received 14 faxes opening new cases, as
well as 184 E-mails--34 from bankers and 150 from consumers. Of those
complaints from consumers, 16 were from Members of Congress. OCC staff
said these numbers are in-line with normal activity levels. When we
asked about the closure, the Ombudsman replied that he decided to obey
the evacuation notice issued by Houston-area officials, and while this
may have resulted in some backlog of cases, his first priority was
ensuring the safety of the Houston OCC employees.
In December 2005, OCC began seeking private-sector support for the CAG
facility, in order to expand its telephone service hours. This
expansion will give OCC the ability to quickly expand CAG's telephone
operating hours in the event of an emergency, and because the third-
party vendor will be located outside of Houston, those staff will be
able to help OCC continue to serve consumers, even if the Houston
office is unable to operate.
Some Groups and Officials Have Concerns About Complaint Handling
Capacity, and OCC Plans to Increase Capacity:
Some consumer groups and state officials stated that the recent banking
activities and visitorial powers rules could potentially increase the
number of complaints OCC receives, since now OCC will more likely
handle all complaints pertaining to national banks and their operating
subsidiaries. These groups and officials argued that OCC did not have
the capacity to adequately handle any new volume. Furthermore, they
contend OCC could not match the resources (i.e., personnel and hours of
operations) of state banking departments, consumer credit divisions,
and offices of state attorneys general that currently work to resolve
complaints and, more broadly, to identify fraudulent and abusive
practices. However, we note that state banking departments and state
attorneys general handle other types of consumer complaints, such as
complaints about automobile dealers, mortgage brokers, and check
cashers.
Since OCC issued the preemption rules in January 2004, the volume of
complaints, according to CAG data, has remained fairly steady. In fact,
between 2000 and 2004 complaints received by OCC have decreased 37
percent. According to OCC staff, complaint volume was high around 2000
due to a settlement with a large national bank on credit card
disclosure issues. CAG data for 2005, while available only through June
at the time of our review, indicate a potential increase in the volume
of complaints when compared with 2004.[Footnote 32] CAG officials
believe that the conversion from state charters to federal charters of
two large banks in 2004 accounts for the increase.[Footnote 33] That
is, customers of those banks who had complaints previously contacted
the appropriate state regulator and either the Federal Reserve or FDIC,
which jointly regulate state chartered banks. After the banks converted
to federal charters, customers contacted OCC concerning any complaints.
These data suggest that an increase to levels of complaints experienced
before the 2004 preemption rules could be absorbed by current OCC
resources. Further, CAG data show that the total number of complaints,
in any given year, received from state offices, including banking
departments and states' attorneys generals, is a relatively small
percentage of the total number of complaints; therefore, any increase
in referrals to OCC from those offices might not have a dramatic effect
on total overall volume. Nevertheless, concerns that OCC resources were
not equivalent to those of a state attorney general or state banking
department were still prevalent among some of those with whom we spoke
at the state level. However, OCC officials said that they have staff--
beyond CAG--that work on consumer protection issues, including bank
examiners in compliance supervision and attorneys in the Community and
Consumer Law and Enforcement and Compliance divisions.
Until 2004, OCC staffed the CAG's toll-free telephone line 4 days a
week, 8 hours a day, but now has service 5 days. One measure OCC uses
to gauge how effectively it is servicing customers is the wait time for
callers to speak with a CAG representative. OCC officials told us their
goal is to answer 80 percent of CAG calls within 3 minutes or less.
According to OCC data, between June 2004 and November 2005, CAG met
this goal, although wait times generally were longer for Spanish
speaking services.[Footnote 34] In addition, to accommodate the
expected increase in call volume due to recent charter conversions, OCC
has recently hired more CAG specialists. Lastly, in December 2005, OCC
began seeking private-sector support for the CAG facility, in order to
expand its telephone service hours. A third-party vendor will handle
routine matters, such as providing materials to satisfy noncomplex
questions, obtaining information from callers that is necessary to open
a case file, routing the caller to the appropriate OCC specialist and
providing the status of an open case. In addition, the vendor's
employees will be able to direct the many callers who have concerns
that pertain to institutions not regulated by OCC to the appropriate
regulator. OCC plans to begin expanding the CAG's telephone hours of
operation after vendor selection and training is completed.
Conclusions:
Overall, OCC's consumer complaint handling operations appear to be in-
line with practices of other regulators, with OCC handling a larger
volume of complaints than the other bank regulators, likely reflecting
its position as the supervisor of banks that account for the majority
of the nation's bank assets. A significant portion of OCC's and other
regulators' work involves providing or clarifying information for bank
customers who have questions and/or have misunderstood a bank product
or service. Officials from all four regulators said that assisting
consumers through the complaint process is an important part of their
efforts to educate consumers about financial products and services. Two
of the federal bank regulators collect some feedback from consumers who
make complaints or inquiries; OCC does not. In contrast, OCC does seek
feedback from banks after every examination, through a survey. Given
that part of OCC's mission is to ensure that consumers of national
banks' products and services are treated fairly and have fair access to
financial services, obtaining feedback from bank customers who contact
CAG should be useful in improving both its service to customers and
helping banks to do likewise. Moreover, federal standards reflected in
GPRA require that government agencies measure their progress toward
goals, including those related to serving the public. OCC measures its
timeliness in serving consumers with complaints and inquiries as one
indicator of its performance and discloses the results in reports that
are publicly available. However, because those reports combine data on
complaints and data on inquiries--which are questions or comments that
are subject to an immediate, simple answer and typically require less
time to handle--they overstate OCC's performance in meeting its
timeliness goal for resolving actual complaints.
OCC appears to make appropriate use of the data CAG collects and
analyzes by informing banks about their performance in relation to
consumer complaints and by using the data to inform its examination and
supervisory activities. CAG's analysis of complaint data is presented
to bank officials annually and used to identify any concerns. OCC
examiners reported CAG data as useful tools in scoping examinations and
in assessing areas of risk. We documented instances when examiners'
audit plans were influenced by information from CAG. We also identified
instances when information gathered from CAG complaints and additional
research by supervisory staff contributed to the development of
supervision policies and guidance.
The concerns expressed by a broad range of consumer advocates and state
officials indicate some uneven understanding of OCC's process for
handling consumer complaints, possibly contributing to the lack of
trust that the agency will be aggressive in protecting consumers'
interests. Because these concerns may inhibit state officials or
consumer advocates from sharing information with or referring consumer
complaints to OCC, they could adversely affect the agency's
effectiveness in regulating banks or assisting bank customers who have
complaints. Consumer advocates and others are concerned about CAG's
centralized location and its capacity to handle complaints particularly
if the volume of complaints should increase. Recent efforts such as
outreach to the Better Business Bureaus and development of a revised
brochure for consumers regarding CAG are appropriate steps designed to
better inform the public of its process and services. However, the
distribution plans for the brochure focus on the banks and rely on them
to share the brochure with bank customers, if the banks wish. Given
that the former Comptroller has acknowledged that OCC and state
officials "have a mutual interest in ensuring that consumers are
protected from illegal, predatory, unfair, or deceptive practices," it
is essential that OCC undertakes outreach to key state partners--
regulators and consumer advocates--in a manner that effectively and
efficiently informs the public, and especially customers of national
banks, about what CAG does and how state officials and OCC can work
together to protect consumers. Such efforts cannot only raise awareness
among the states about OCC's efforts and capabilities to assist
consumers, it might help allay the suspicion and mistrust we identified
and construct a path for better cooperation between OCC, state
officials, and consumer advocates in the future.
Recommendations:
To identify ways to improve its process for handling consumer
complaints and inquiries and its efforts to better inform, educate, and
serve bank customers, we recommend that the Comptroller of the Currency
take the following three actions:
* Develop and implement a feedback mechanism to receive input and
measure satisfaction of bank customers who have used CAG services.
* Revise the data publicly reported on timeliness to reflect complaints
resolved within the 60-day goal separately from data reported on
inquiries resolved within the time frame.
* Develop and implement a comprehensive plan to inform bank customers,
consumer advocates, state attorneys general, and other appropriate
entities of OCC's role in handling consumer inquiries or complaints
about national banks. The plan could include such steps as directly
distributing an informational brochure to some bank customers and
meeting with state and local consumer advocates and appropriate state
officials to describe OCC's role and processes for assisting bank
customers and others who raise consumer protection concerns.
Agency Comments and Our Evaluation:
We obtained written comments on a draft of this report from the
Comptroller of the Currency; they are presented in appendix II. OCC
generally concurred with the report and agreed with our three
recommendations. Specifically, OCC stated that a broader comparison of
consumer protection activities, including those of state agencies,
would have provided a clearer picture of protections available to
consumers, but it acknowledged that such a comparison was beyond the
scope of our report. Regarding the recommendations, OCC said it will
develop and implement a customer feedback mechanism to receive input
and measure satisfaction of those who have used CAG services. OCC also
agreed to revise the data that it publicly reports on timeliness to
reflect complaints resolved within the 60-day goal separately from data
reported on inquiries. Finally, OCC acknowledged that state officials
may not be aware that it does have some practices currently in place to
inform state officials of the outcome of consumer complaints, and
therefore it will undertake additional outreach to state agencies to
make them aware of those options. Therefore, OCC agreed with our
recommendation that it develop and implement a comprehensive plan to
inform bank customers, consumer advocates, state attorneys general, and
other appropriate entities of its role in handling consumer inquiries
or complaints about national banks. OCC also provided technical
comments that we have incorporated, as appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of this report
until 30 days from the report date. At that time, we will provide
copies of this report to the Comptroller of the Currency and interested
congressional committees. We also will make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-8678 or [Hyperlink, woodd@gao.gov]. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. Key contributors are
acknowledged in appendix III.
Signed by:
David G. Wood:
Director, Financial Markets and Community Investment:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To describe how the Office of the Comptroller of the Currency (OCC)
handles consumer complaints and to compare how its process compares
with that of other bank regulators, we interviewed officials in OCC's
Customer Assistance Group (CAG), as well as their relevant counterparts
at the Federal Reserve, Federal Deposit Insurance Corporation (FDIC),
and Office of Thrift Supervision (OTS). We visited the CAG office in
Houston, Texas, and observed its work, including a review of 18 closed
cases to learn what information CAG collects from complaints.[Footnote
35] In addition, we reviewed CAG's policies and procedures that relate
to consumer complaint processing.
To describe how the four regulators resolve the complaints they handle,
we requested complaint data for calendar years 2000 through
2004.[Footnote 36] Specifically, we obtained information about the
source and resolution (outcomes) of complaints, the banking products or
services involved, and the amount of time the regulators took to
resolve them. The data came from four different databases: (1) OCC's
REMEDY database, (2) the Federal Reserve's Complaint Analysis
Evaluation System and Reports (CAESAR), (3) FDIC's Specialized Tracking
and Reporting System (STARS), and (4) OTS' Consumer Complaint System
(CCS). We obtained data from OCC, the Federal Reserve, FDIC, and OTS in
September 2005 that covered calendar years 2000 through 2004. For
purposes of this report, we sought to use REMEDY, CAESAR, STARS, and
CCS data to describe the number of cases each regulator handled, what
products consumers complained about, how the regulators disposed of
complaints, the number of complaints and inquiries the regulators
forwarded to other federal agencies, and how long it took the
regulators to resolve complaints. To assess the reliability of data
from the four databases, we reviewed relevant documentation and
interviewed agency officials. We also had the agencies produce the
queries or data extracts they used to generate the data we requested.
Also, we reviewed the related queries, data extracts, and the output
for logical consistency. We determined these data to be sufficiently
reliable for use in our report.
To make general comparisons about the source and resolution of
complaints between the four regulators, we created categories that
include all of the codes each regulator used to describe the sources
and resolutions of complaints. Officials of the Federal Reserve, FDIC,
OTS and OCC agreed with our categorization of their respective source
and resolution codes. The source categories were "consumer," "federal,"
"state," and "other." The resolution categories consisted of (1)
regulators provide consumers additional information, (2) complaint is
withdrawn or tabled due to litigation, (3) regulators determine that
bank was not in error, and (4) regulators determine that bank was in
error. Using the codes, we sorted each of the regulators' complaints
and tallied the number of complaints that fell into each category. We
also sorted the complaints by codes indicating the type of bank product
or service and confirmed for certain products, such as credit cards,
that the codes represented the entire universe of complaints about the
product. To describe how long it takes to resolve a complaint, we
requested from each regulator a frequency count of how many complaints
were resolved within and over 60 days.
To describe how CAG's efforts related to OCC's supervision of national
banks, we interviewed OCC officials and reviewed related documents
about how consumer complaint data influence bank examinations and
guidance. We interviewed CAG officials and examiners at six national
banks concerning how CAG shares consumer complaint information and how
information is used by bank examiners. In addition, we interviewed bank
officials to learn what information CAG provides the banks and how
banks use the information.
To identify issues raised by consumer advocates and state officials, we
conducted site visits in four states: California, Georgia, New York,
and North Carolina. The site visits included interviews of state
attorneys general, banking regulators, banking officials and local
consumer advocate groups, as well as analysis of relevant documents. We
also interviewed state officials in two additional states, Iowa and
Idaho.[Footnote 37] We selected these locations, in part, based on
their experience with state consumer protection laws. In addition, we
interviewed representatives of national consumer groups, including the
Center for Responsible Lending, Consumer Federation of America,
National Community Reinvestment Coalition, National Consumer Law
Center, and Association of Community Organizations for Reform Now.
Also, we interviewed representatives of national trade groups for state
officials in Washington, D.C., including the Conference of State Bank
Supervisors and the National Association of Attorneys General.
We conducted our work in California, Georgia, New York, North Carolina,
Texas, and Washington, D.C., from October 2004 through December 2005 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Office of the Comptroller of the
Currency:
Comptroller of the Currency:
Administrator of National Banks:
Washington, DC 20219:
January 27, 2006:
Mr. Dave G. Wood:
Director, Financial Markets and Community Investment:
United States Government Accountability Office:
Washington, DC 20548:
Dear Mr. Wood:
We have received and reviewed your draft report titled "OCC Consumer
Assistance: Process Is Similar to That of Other Regulators, But Could
Be Improved by Enhanced Outreach." The OCC's issuance of final
regulations setting forth standards for determining when state laws can
be applied to the operations of national banks (preemption), and
clarifying the respective roles of federal and state authorities in
overseeing the activities of those institutions (visitorial powers)
prompted a Congressional request for your review in response, to
concerns expressed by some state officials and consumer groups about a
perceived loss of consumer protection. The requesters asked you to
evaluate the OCC's process and capacity for providing assistance to
consumers.
You concluded and are reporting that: (1) the OCC's handling of
consumer complaints is similar to that of other regulators; (2) the
Customer Assistance Group's (CAG) consumer complaint data informs OCC's
bank supervisory activities; and (3) despite OCC efforts, state
officials and consumer advocates still have concerns about OCC's
commitment and capacity to address consumer complaints.
As we previously conveyed in our comments on the draft report, given
the genesis of the request for GAO review, we wished that your analysis
could have encompassed the state agencies that have registered concerns
about the OCC. While we recognize that such a comparison was beyond the
scope of your project, comparing the OCC's consumer protection
activities and resources to those of the full range of agencies and
entities involved in this area would have provided a clearer and more
complete picture of the protections available to consumers nationally.
Even within the limited focus on Federal agencies, extending your
comparison beyond routine processing to value-added uses of complaint
information would have provided a more complete context for evaluating
the OCC's performance. While we are proud of the performance of OCC's
CAG, we are always looking to improve our performance. A better
understanding of state and Federal capabilities would help to further
strengthen our own consumer protection activities and mesh them more
effectively with services provided by others.
Service to and Feedback from Consumers:
Your report provides a positive assessment of the OCC's complaint
handling process. Nevertheless, we would like to emphasize that our
assistance to consumers is more than our CAG handling complaints. We
take a holistic approach that, we believe, sets us apart from the other
federal regulators with whom we are compared. First and foremost, the
information that we glean from providing service to individual
customers of national banks and their subsidiaries is integrated into
the supervisory process. Not only do examiners use the information to
set the scope of their examinations and to evaluate banking practices,
but the information is shared with the institutions to encourage them
to provide better service to their customers at the time of product
delivery and in resolving any disputes or concerns that may arise. The
service that we provide also extends to the operating subsidiaries of
national banks. We accept and resolve complaints from consumers about
their transactions with institutions that are currently national banks
and their subsidiaries regardless of the entities' status at the time
the transaction at issue occurred.
You observed that the OCC does not have a formal mechanism for
assessing consumer satisfaction with our services. We accept your
recommendation to develop and implement a feedback mechanism to receive
input and measure satisfaction of bank customers who have used CAG
services. Not only will such a survey add value to our process by
providing us another opportunity to have a dialog with consumers, but
also their feedback will prompt us to make improvements to our process.
Informing Others:
Your report is helpful in pointing out specific areas where state
governmental entities and consumers may not be aware of our efforts or
have misperceptions about them. We are committed not only to clearing
up misperceptions but to reporting correct information and sharing
information with the states. We will take the steps you recommend to
revise the data publicly reported on timeliness to reflect complaints
resolved within the 60-day goal separately from data reported on
inquiries resolved within the timeframe.
As you point out, it has been our practice to share information
concerning the outcome of consumers' complaints with state entities
when asked. When a state agency forwards a complaint to the OCC and
requests either a copy of the OCC's response to the consumer or to know
the result, we provide a copy of our letter or follow up with a phone
call to the state. Because some states may not be aware that we do
this, we will undertake additional outreach to state agencies to make
them aware of this option. We also will again encourage state agencies
to enter into memoranda of understanding that would facilitate broader
information sharing. As you report, we revised the draft memorandum of
understanding in an effort to address concerns raised by states
concerning a previous draft; however, despite our efforts to address
those concerns, only one agreement has been formalized.
Accordingly, your recommendation that we develop and implement a
comprehensive plan to inform bank customers, consumer advocates, state
attorneys general, and other appropriate entities of OCC's role in
handling consumer inquiries or complaints about national banks is
entirely appropriate.
We appreciate the opportunity to comment on the draft report and to
reaffirm our commitment to providing superior service to consumers.
Sincerely,
Signed by:
John C. Dugan:
Comptroller of the Currency:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
David G. Wood (202) 512-8678:
Staff Acknowledgments:
In addition to those named above, Katie Harris (Assistant Director),
Nancy Eibeck, Jamila Jones, Landis Lindsey, James McDermott, Kristeen
McLain, Suen-Yi Meng, Marc Molino, David Pittman, Barbara Roesmann,
Paul Thompson, and Mijo Vodopic made key contributions to this report.
(250226):
FOOTNOTES
[1] OTS, established by Congress as a bureau of the Department of the
Treasury, charters, examines, supervises, and regulates federal savings
associations. For the purposes of this report, we refer to federal
savings associations as banks.
[2] OCC is a bureau of the U.S. Department of the Treasury. 12 Stat.
665 (1863). In 1864, Congress revised the National Currency Act
(renamed the National Bank Act) to provide for comprehensive OCC
regulation of national banks. Although OCC is a bureau of the Treasury,
it is an independent office within Treasury. In 1994, Congress amended
the National Bank Act to describe OCC's autonomy with respect to
rulemaking. Pub. L. No. 103-325 § 331(b).
[3] See GAO, OCC Preemption Rulemaking: Opportunities Existed to
Enhance the Consultative Efforts and Better Document the Rulemaking
Process, GAO-06-8 (Washington, D.C.: Oct. 17, 2005).
[4] OCC also supervises federal branches and agencies of foreign banks.
[5] According to OCC's Comptroller Handbook--Bank Supervision Process
(April 1996), a large bank is one with total assets of $1 billion or
more or a bank that is part of a multibank holding company, which
includes at least one bank with assets of $1 billion or more.
[6] 12 C.F.R. 7.4000 (2005).
[7] 12 C.F.R. 7.4007, 7.4008, 7.4009, 34.3, 34.4 (2005). These
regulations also contain an antipredatory lending standard and discuss
OCC enforcement of section 5 of the Federal Trade Commission Act for
consumer protection purposes.
[8] 68 Fed. Reg. 46119, 46120 (Aug. 5, 2003).
[9] During our work, we interviewed six state banking regulators about
how they handle consumer complaints. Though all six generally follow
the same process as the four federal regulators, we did not evaluate
the states' processes. The purpose of obtaining information from
selected states was to provide context for our review of the federal
regulators. See appendix I for a list of state banking regulators we
interviewed.
[10] Federal regulators have this requirement because many complaints
involve personal information about the consumer that the regulator
cannot request from a bank without the consumer's consent.
[11] CAGNet is a custom application that securely transfers consumer
complaints and provides consumer complaint data to bank management for
analysis. Of all complaints sent to any OCC supervised bank for
response, approximately 90 percent were transmitted via CAGNet, based
on December 31, 2004, data.
[12] Among the six state regulators we interviewed, the range was 14 to
45 days.
[13] If a consumer does not find the bank's response satisfactory, the
consumer may contact the bank, seek legal counsel, or appeal to the
regulator. Each federal regulator will reconsider a complaint that has
already been resolved, though the appeal processes vary slightly across
the regulators.
[14] GPRA requires agencies to set multiyear strategic goals in their
strategic plans and corresponding annual goals in their performance
plans, measure performance toward achieving those goals, and report on
their progress in their annual performance reports.
[15] In order of decreasing frequency, for the Federal Reserve and OTS,
the resolution categories from 2000 through 2004 were (1) providing the
consumer with additional information, (2) finding the bank not in
error, (3) finding the bank in error, and (4) withdrawing or tabling
the complaint. For FDIC, resolutions consisted of (1) providing the
consumer with additional information, (2) finding the bank not in
error, (3) withdrawing or tabling the complaint, and (4) finding the
bank in error.
[16] Of the four federal regulators, OTS and OCC specifically identify
complaints that result from miscommunication, while the Federal Reserve
and FDIC include such resolutions under broader categories.
[17] In 2000, OCC began coding all referrals to other federal and state
agencies as inquiries.
[18] Instances in which the regulator determined the complaint to be
withdrawn does not necessarily mean that the consumer withdrew the
complaint.
[19] This resolution category was on average about 3 percent for
Federal Reserve and OTS, and about 9 percent for FDIC, from 2000
through 2004.
[20] This practice is shared by the Federal Reserve, FDIC, and OTS.
[21] In addition to complaints, regulators also handle inquiries,
defined as informational-only calls and correspondence. All the
regulators handle inquiries in the same manner by providing the
consumer the relevant information or directing the consumer to
appropriate sources for the information, such as other regulators. This
report focuses on complaints.
[22] Credit card complaints accounted for, on average, about 39 percent
of all complaints handled by OCC, from 2000 through 2004. For FDIC, the
amount was nearly 29 percent and for the Federal Reserve, approximately
40 percent.
[23] By the end of 2004, OCC had under its supervision banks that
accounted for nearly 67 percent of all assets held in commercial banks.
[24] To collect comparable data from all four federal regulators, we
requested the data by calendar year.
[25] Two OCC booklets from the Comptroller's Handbook establish the
agency's general examination policies and procedures: Community Bank
Supervision and Large Bank Supervision.
[26] The guidance encourages banks to conduct comprehensive due
diligence to determine what third-party services or products can best
help the bank achieve its goals and monitor the performance of the
third-party vendors with regular reporting and documentation of such
items as business plans, risk management reports, and contracts. OCC
Advisory Letter 2000-9.
[27] Our forthcoming report will discuss broader issues related to the
impact of the preemption rules on dual banking and consumer protection.
For example, it will provide information on how some state officials
have handled consumer complaints since OCC issued the rules.
[28] GAO-06-08.
[29] Better Business Bureaus are private, nonprofit organizations
funded by member businesses and other support. Their aim is to foster
fair and honest relationships between businesses and consumers.
[30] In 2004, the bureaus reported receiving over 17,000 complaints
about credit cards and related plans and about 11,000 complaints about
mortgages. Among all complaints, these bank-related issues ranked
number 3 and 12, respectively. Complaints about cell phone service
ranked number one and auto dealers number two.
[31] According to OCC's continuity of operations plan, CAG telephone
lines serving consumers are to be back online 8 days after a closure.
The telephone center in Houston would also serve as the main
communication hub for OCC nationwide, should a disaster occur in
Washington, D.C., or elsewhere outside of Houston.
[32] The number of complaints from January to June 2005 was 21,453.
Assuming levels for the second half of the year match those of the
first, we project a total of 42,906 for all of 2005. Complaints for
2004 were 34,669.
[33] During 2004, two large state-chartered banks came under OCC's
supervision when they converted to national charters. One had assets of
$649 billion and the other $93 billion.
[34] Over the same 18-month period, calls from Spanish-speaking
customers represented 1.9 percent of total call volume. According to
OCC officials, the CAG telephone system retains data only for the most
recent 18-month period. Therefore, as of December 2005, data were not
available on wait times prior to June 2004.
[35] Our sample was a nonprobability sample, so our results cannot be
used to make inferences about the population. In a nonprobability
sample, some elements of the population being studied have no chance or
an unknown chance of being selected for the sample.
[36] To determine the total amount of assets under supervision for each
regulator, as well as, assets under supervision related to credit
cards, we also reviewed information from FDIC's Statistics on
Depository Institutions for the period 2000 to 2004.
[37] We reviewed general information from the six state banking
regulators that we interviewed about how their respective agencies
handle consumer complaints.
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