Big Banks Push Back on CFPB Effort to Oversee Customer Service

Big banks told the the Consumer Financial Protection Bureau to stay away from policing their customer service operations.

The consumer finance watchdog lacks authority to write rules or otherwise review how banks interact with individual customers, the American Bankers Association, the Bank Policy Institute, and the Consumer Bankers Association said Monday in a joint comment letter.

The letter is a response to the agency’s June request for information on bank customer service operations. The CFPB is gathering data as part of a broader push to bring back so-called “relationship banking,” with a greater focus on dealing with individual customers, rather than tech-enabled “algorithmic banking.”

The three banking trade groups said the CFPB is misreading its powers under the 2010 Dodd-Frank Act’s Section 1034(c).

The CFPB says 1034(c) allows consumers to get information about their accounts, including written documentation “in a timely manner,” and that the agency has the right to monitor for compliance. The banking trade groups say the Dodd-Frank provision applies only to responses to specific customer complaints.

“It appears that the CFPB is attempting to use this RFI to create a legal authority that it does not have: the right to dictate the type of customer service banks provide and the manner in which they do so,” the groups wrote.

The CFPB said the information request was meant to get data about the obstacles consumers face when trying to get assistance from their banks.

“Customers of large banks should not have to run through an obstacle course to get a straight answer about their account,” CFPB Director Rohit Chopra said in June.

The CFPB appears to have already “drawn conclusions” about bank customer service given the tone of the information request, the trade groups said Monday.

Prescriptive rules would make it harder for banks to use technology, like artificial intelligence, to better serve customers, the letter said.

The CFPB risks “undermining the robust, competitive marketplace for consumer products and services” if it endorses a specific business model for customer relations, the letter said.

The Independent Community Bankers of America, which represents smaller banks, was noticeably absent from the joint trade group letter.

The ICBA said in its own letter that it appreciates the CFPB’s “recognition of, and support for, relationship banking.” But the group, many of whose members have total assets of $10 billion or less, also cautioned against setting rules for how banks deal with customers.

Banks would spend “more time adhering to regulatory procedure, documenting compliance, and consequently, less time meeting the needs of their customers,” the ICBA said.