Michael Moebs, Moebs $ervices
LAKE FOREST, Ill.—An independent review of CFPB consumer complaint data reveals that when it comes to service, credit unions are looking much better than big banks in the eyes of consumers.
What complaints were made against CUs were primarily made against four credit unions.
In June the CFPB started to release detail on complaints consumers have made against financial companies.
According to Moebs $ervices, which reviewed the complaints submitted to the CFPB from December 2011 through late June 2015, the vast majority were against big banks.
“Credit unions look very positive,” said Michael Moebs, economist and CEO at Moebs $ervices. “Of the 1,560 complaints aimed at mainly four credit unions, you have about 408,000 complaints going somewhere else.”
627,000 Complaints
One hundred and two financial institutions had complaints filed against them, said Moebs, of the data the CFPB made available. A total of 627,000 complaints were taken by the CFPB during the period, and 216,993 complaints were not made available, Moebs added.
“The complaints against the four CUs—Navy FCU, Pentagon FCU, (North Carolina) State Employees’ CU and Boeing Employees' CU (BECU)—make up less than 1% of all FI complaints, said Moebs. “The majority of the complaints—92.2%—were against large banks with assets greater than $10 billion. Main Street institutions only represented 7.8% of the total FI complaints—and no small community banks or credit unions.”
Moebs is urging credit unions and their trade organizations to “flaunt” the data.
“This tells Washington, the CFPB and consumers who is giving the best service,” said Moebs. “Forget about all the member surveys. Just look at what the CFPB complai
nts tell you—credit unions are less than 40 basis points of all the complaints. That is outstanding member service.”
Dodd-Frank The Issue
While that is good news, Moebs emphasized that much of what Dodd-Frank and Washington are doing is putting many Main Street institutions out of business.
“The CFPB should look at these stats, look in the mirror, and say, ‘We should not go after the small guys. Instead, we should make it easier for them by getting rid of all this compliance burden.’”
Moebs $ervices review of the complaint data shows that credit unions are doing much better than banks with mortgage complaints, something the CFPB should also take note of, Moebs said.
Of the total complaints the CFPB has made available, 36.7% are for mortgages. CU mortgage complaints made up only 25.9% of the complaints filed against them.
“This is very good,” said Moebs. “It shows that credit unions are doing better than banks in an area in that is a key focus of the CFPB.”
But one negative for CUs from the numbers, said Moebs, is that credit unions are doing poorly with checking account service when compared to the entire financial services industry. Of all the complaints Moebs $ervices reviewed, 35.3% were for deposit accounts, while over 75% of all these deposit complaints were for credit union share drafts.
“This is a message to credit unions that they have to do a much better job with checking service,” said Moebs who said in his reading of the CU complaints consumers often focused on the checking account opening and closing processes.
CUs Need To Improve With Checking
Moebs said that when it comes to checking, credit unions must improve transparency, member education and speed at which they contact members when a problem arises. He emphasized that CUs have to markedly improve outdated and cumbersome checking account opening forms.
“Credit unions have to improve these forms, not only to make them easier to complete but to also understand,” said Moebs. “Bring the language down to a junior high level. Make sure members understand exactly what they are getting when they open a checking account. This will do a great deal to lower complaints here.”
Moebs reiterated that a total of 627,000 complaints were taken from December 2011 to June 2015 and 410,007 total complaints were made available. Financial institutions made up 207,187, or 51.5% of the total available complaints. The remaining 202,820, or 49.6% of all complaints, were non-financial service firms, which mainly consist of credit reporting agencies, collection agencies and law firms involved with debt collection, Moebs said.
“This raises a question why 216,993 complaints, 34.6% of the total complaints were not made available. What’s the reasoning for the lack of reporting for such a large number of complaints?” said Moebs. “If a credit union or bank had this lack of accuracy, they would be out of business.”