Legal Ease is the weekly Q&A from the IBAT Bottom Line. Go to the Legal Ease Archive.
Latest Additions to Legal Ease:
Can you direct me to a site that explains what constitutes a complaint? We have a complaint policy etc and a procedure to log written complaints but the staff asks – just what is a serious complaint?
The various regulatory agencies are deliberately vague about what constitutes a complaint. For example, the OCC merely alludes to dissatisfaction with a product or service or other issues related to applicable state and federal laws. Likewise the CFPB simply asks "Have an issue with a financial product or service?" when inviting a consumer to submit a complaint.
You may want to consider the following when explaining what a complaint is to your staff, and what should be covered by your complaint policy and procedures.
1) Any allegations of an error, potential fraud or misconduct by an individual, a bank employee, or the bank itself by a customer including -
- Allegations of funds missing from an account or a financial loss
- Allegations that indicate possible identify theft
- Allegations of breach of financial privacy by the bank or a 3rd party service provider of the bank
- Error resolution claims under Regulation E
- Credit reporting errors under the Fair Credit Reporting Act
- Qualified written request for information under Real Estate Settlement Procedures Act
2) Any allegations about a bank product or service by the customer claiming -
- The product or service was misrepresented
- The product or service is deceptive
- The product or service is abusive
3) Any allegation that the bank has violated state or federal law in which the customer -
- Has retained or threatened to retain an attorney
- Has contacted or threatened to contact a bank regulatory agency
- Has indicated they have been discriminated against
- Has indicated the bank's products or services violate state or federal rules and regulations
What is not a serious complaint? Something like "My teller has bad breath!" or "The ladies restroom is out of toilet paper!" are not serious complaints. Some fall in a grey area - for example "The commercial drive thru wait is too long!". While it may not rise to the level of a serious complaint under a bank's formal policy, it might reflect problems with the delivery of a product or service.
A bank’s board and senior management must ensure that their bank is prepared to handle consumer complaints in a timely manner. Policies and procedures for taking and addressing complaints must be established. The procedures must identify the individuals (or positions) and departments responsible for handling different complaints. All bank personnel must know the policies and procedures in order to expeditiously refer complaints to the correct persons. Persons filing a complaint should be given the name of a single bank staff member who is responsible for their complaint and every time they communicate with the bank, they should communicate with the same person.
To ensure timely and sufficient resolution, the compliance officer must receive copies of all complaints and is responsible for managing the complaint process. The board and senior management must communicate its support and encouragement of the compliant process and of the compliance officer’s management of the complaint process. Once a complaint is resolved, the job isn’t finished. The compliance officer and at least one staff member of the department involved should determine actions to take to avoid further similar complaints. (e.g., improve the bank’s business practice; re-train personnel).
Finally, the board of directors should receive regular reports regarding customer complaints and their resolution. Such report may simply identify categories of reports and their resolution status. Complaints are a useful tool to identify potential weaknesses in either compliance or customer relations!
We have recently returned some checks on an elderly customer whose account suddenly became NSF. She has never had a history of such activity and in reviewing the checks it appears that they have been being forged. We have since found out she has a grandson who was recently living with her and she is now in the nursing home. We are in the process of reviewing her account and the signatures on the checks. In the recesses of my mind, I seem to remember reading somewhere that we had a duty to report such activity to Adult Protective Services to allow them to investigate. Can you give me any guidance on this?
Yes - you do have an absolute duty to report.
See Texas Human Resources Code – Section 48.051 and Section 48.052
§ 48.051. REPORT. (a) Except as prescribed by Subsection (b), a person having cause to believe that an elderly or disabled person is in the state of abuse, neglect, or exploitation shall report the information required by Subsection (d) immediately to the department.
(b) If a person has cause to believe that an elderly or disabled person has been abused, neglected, or exploited in a
facility operated, licensed, certified, or registered by a state agency other than the Texas Department of Mental Health and Mental Retardation, the person shall report the information to the state agency that operates, licenses, certifies, or registers the facility for investigation by that agency.
(c) The duty imposed by Subsections (a) and (b) applies without exception to a person whose knowledge concerning possible abuse, neglect, or exploitation is obtained during the scope of the person's employment or whose professional communications are
generally confidential, including an attorney, clergy member, medical practitioner, social worker, and mental health
(d) The report may be made orally or in writing. It shall include:
(1) the name, age, and address of the elderly or disabled person;
(2) the name and address of any person responsible for the elderly or disabled person's care;
(3) the nature and extent of the elderly or disabled person's condition;
(4) the basis of the reporter's knowledge; and
(5) any other relevant information.
(e) If a person who makes a report under this section chooses to give self-identifying information, the caseworker who investigates the report shall contact the person if necessary to obtain any additional information required to assist the person who is the subject of the report.
§ 48.052. FAILURE TO REPORT; PENALTY. (a) A person commits an offense if the person has cause to believe that an elderly or disabled person has been abused, neglected, or exploited or is in the state of abuse, neglect, or exploitation and knowingly fails to report in accordance with this chapter. An offense under this subsection is a Class A misdemeanor.
(b) This section does not apply if the alleged abuse, neglect, or exploitation occurred in a facility licensed under Chapter 242, Health and Safety Code. Failure to report abuse, neglect, or exploitation that occurs in a facility licensed under that chapter is governed by that chapter.
Added by Acts 1987, 70th Leg., ch. 1052, § 5.03, eff. Sept. 1, 1987. Amended by Acts 1991, 72nd Leg., ch. 14, § 284(21), eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 303, § 7, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1278, § 1, eff; Sept. 1, 1997. Renumbered from § 48.0361 and amended by Acts 1999, 76th Leg., ch. 907, § 6, eff. Sept. 1, 1999.
You can file a report by calling Adult Protective Services at (800) 252 – 5400. Remember to document your file with the information you reported. Remember also, you may have to file a Suspicious Activity Report (SAR) in addition to reporting this to Adult Protective Services. Any report filed with Adult Protective Services - like the SAR - is confidential and not subject to disclosure. Additionally, any employee making a report and the bank have immunity from civil and criminal liability unless they act in bad faith.
We have a customer who we call routinely because he is overdrawn. He comes in, asks to go into his safe deposit box and then goes to the teller window to deposit cash into his account. On more than one occasion, he has done it twice a day. We haven’t actually seen him take the cash out of his box, but it is pretty obvious that is what he is doing. Should we file a SAR or just ignore the fact of what we suspect he is doing?
Filing as Suspicious Activity Report (SAR) always involves some subjectivity and careful deliberation; however, you can't ignore suspicious activity. The issue is that this behavior is both #1) unusual; and #2) suspicious. Additionally, you are not required to confirm or prove the specifics - if it is both #1) unusual; and #2) suspicious that is all you really need to justify a SAR . If this exceeds $5,000 and you have an identified suspect (the accountholder), then you must file. If it is less than $5,000, you may file but generally are not required to. In this case it may not meet that mandatory filing threshold in a single transaction, but the activity probably warrants a SAR.
The bank owns an insurance agency as a subsidiary of the bank. My question concerns the 3% rule since we own the insurance agency - will the premium paid for home owners insurance be considered as part of the 3% for fees and points?
This question was posed by a national bank. IBAT staff reached out to an attorney with the OCC in Dallas and below is their response.
If a creditor is affiliated with an insurance agency (that forwards premiums to an insurer), and the agency gets a commission for providing hazard insurance (and so payments are retained by the affiliate), must the part of the initial payment for hazard insurance (which are escrowed) or subsequent payments be considered in points and fees?
The answer (as informally confirmed with the CFPB) is that the commission would be considered in points and fees (like any other 4(c)(7) fee paid to affiliates), but not the premium because it is not retained by the affiliate.