Addressing Ethical Complaints & Mitigating Risks in Credit Unions

Every organization experiences unethical behavior and misconduct. However, you might not know the extent of your issues if you don’t have an easy, accessible place to receive ethics complaints.

That’s why an ethics hotline is a must-have tool for mitigating risks. You’ll learn about issues faster, resolve them before they escalate into serious problems, and offer members a better experience, which benefits them as well as your credit union.

Customer/Member Complaints and CFPB Compliance

In its quest to eradicate potentially unfair, deceptive, or abusive acts or practices (UDAAP), the Consumer Financial Protection Bureau (CFPB) requires large financial institutions to handle customer service complaints by:

• Recording every complaint that is received;
• Categorizing each complaint so it’s easier to track and assess areas of risk; and
• Addressing each complaint and escalating those which involve legal issues.

In addition, the Bureau has set up its own complaints portal that any consumer can access to file a complaint against a financial service provider. As a result, service providers should ensure that their own complaints management systems are serving the needs of customers to avoid becoming a line item in the CFPB consumer complaint database.

When consumers file a complaint with the CFPB, they will communicate with the financial institution regarding the next steps. The company then has 15 days to submit an initial response to the CFPB detailing how it will address the complaint. In some cases, the institution can take up to 60 days to provide a final response if they tell the complainant they’re working on it.

So, how can you ensure you’re compliant? Take these four steps:

• Devote resources to complaint handling;
• Appoint a CCO (chief compliance officer);
• Create a complaint system (e.g., hotline, webform, paper forms in your branches, dedicated email address); and
• Arrange independent compliance audits.

Compliance isn’t always easy or fun, but it comes with benefits aside from simply avoiding penalties. The fact that it will help to streamline complaints and ensure they are investigated and addressed means a better experience for the member. When the member has a better experience, it also works to your advantage, too. They will be more likely to do business with your institution again, as well as help you maintain a favorable reputation.

How an Ethics Hotline Mitigates Risks

Implementing an ethics hotline can take a lot of time, money and effort. But all of this work comes with benefits for your organization, both tangible and intangible.

Fewer Fines and Lawsuits: No matter the size of your credit union, your bottom line is probably one of your top priorities. Did you know that an ethics hotline can help you save money?

According to one study of internal whistleblowing from the Journal of Accounting Research, companies with more hotline reports actually experience fewer lawsuits and regulatory fines, because you can catch and resolve issues faster.  “Companies getting fewer reports don’t have fewer problems, management is just less aware of the problems,” the study said.

In other words, the easier it is for members to submit ethics complaints, the lower your risk of issues escalating and leading to these negative consequences.

Public Reputation as an Ethical Organization: No one wants to do business with a dishonest company. On the flip side, if you’re known for addressing complaints swiftly and seriously, you’ll attract more members (and great employees, too!).

More than ever before, people want to see organizations own their mistakes and announce how they’ll change for the better. If a report leads to a negative story (e.g. a harassment scandal or kickback scheme), don’t try to hide it. Instead, use it as an opportunity to show the public the positive changes you’ll make to correct the issue.

Better Incident Prevention: Finally, an ethics hotline can help you catch small problems before they become disastrous.

Use your historic hotline data to take corrective and preventive measures. Are there certain types of incidents that are reported more than others? Is one of your locations a hot spot for issues?  By analyzing reporting data, you’ll uncover the areas that need improvement so you can stop incidents before they start.

Best Practices for Handling Complaints

When you receive an ethics complaint, no matter what it’s about or who it’s coming from, there are some universal best practices to follow. In fact, following these best practices can increase member loyalty and cut the cost of resolving complaints in half.

Try these tips to improve your complaint-handling process:

• Make it easy to file a complaint. The most successful companies want to hear complaints. Informed staff and members are the first to know if things aren’t working. Feedback helps identify the root causes of unhappiness. Use this information to make changes and improve overall satisfaction.
• Respond quickly. Sixty-eight percent of customers leave a company because they believe you don’t care about them, according to a Rockefeller Corporation study. Prove you care by responding to complaints courteously, quickly and with common sense. Customers reward companies that quickly solve problems with loyalty.
• Resolve issues the first time. Resolving ethics complaints on the first contact builds confidence in your company and saves money by eliminating unnecessary additional contacts that escalate costs. After all, 52% of customers say that first-call resolution is their highest-rated factor for customer experience, according to the 2023 Customer Experience Decision Makers’ Guide from ContactBabel.
• Hire only the best for the job. Handling complaints can be a tough job, and you want only the most qualified people with the best communication skills to represent your company and your values. Ensure those you employ work to represent values of transparency and accountability each day.

How to Mitigate Ethics Issues and Reduce Risk

Most organizations probably won’t face a million-dollar lawsuit anytime soon. However, companies that are apathetic to complaints and only react when necessary increase their chances of dissatisfaction among employees and customers. Staying on top of complaints is essential to attract and retain loyal customers, stay compliant and maintain a positive public reputation.

Shannon Walker is the Executive Vice President of Strategy for Case IQ, a workplace investigation tool provider based in Ottawa, Ontario, Canada.