In the advocacy business, it's an article of faith that the credit union difference needs to be promoted at every turn. That's why what I saw at the Consumer Financial Protection Bureau last week gave me pause, but at the same time opened the door to improving the way CFPB views credit unions.
CFPB's Credit Union Advisory Council convened a meeting in Washington Oct.1 that featured a very detailed discussion by bureau staff about the nuts and bolts of their new consumer complaint website.
Intended to collect and resolve issues raised by aggrieved consumers, the site is a major element of how CFPB interacts with the public. Leaving aside the controversy surrounding the fairness of having unproven allegations made public in this way, the consumer complaint database will become an increasingly formidable part of the daily life of all financial services providers. Count on it.
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In the midst of this long discussion, however, the thing that struck me was what wasn't mentioned: credit union supervisory committees.
Unlike banks and other types of depositories, federally chartered credit unions are required by statute to have a supervisory committee, part of whose responsibility is to provide independent internal oversight of the credit union's board and management. It is also charged with advocating the best interests of the credit union's members, which, according to NCUA regulations, includes investigating and reviewing member complaints.
This is significant because the very existence of a supervisory committee speaks directly to a key difference that sets credit unions apart: a credit union is its members, and vice versa.
A credit union operates to serve member interests, and those members in turn have a responsibility to their fellow members under the roof of an institution they cooperatively own. It follows that it's not simply a suggestion for a supervisory committee to do its work thoroughly and fairly; it's an NCUA requirement.
Credit unions need to make certain CFPB knows and understands what a supervisory committee is, and how it can work for credit union members. This unique entity should be extolled as a kind of "first responder" that empowers members in a way that distinguishes them from consumers who do business with banks.
CFPB may not be aware of the role that credit union supervisory committees play. If that's the case, the credit union movement, and its national trades, should step up and make sure that CFPB knows the full story.
Am I suggesting that a supervisory committee is a panacea when it comes to consumer complaints? Of course not. In my experience, both as an industry advocate and as a former staffer at NCUA, I realize that some supervisory committees are more robust, more active and frankly, more effective than others.
And, I don't want to suggest that CFPB somehow exclude credit union members from using their website to lodge complaints. I just want consumers to know that, if they're members of a federally chartered credit union, they have a serious, legitimate option in resolving complaints, one that may provide relief before they feel the need to use CFPB or any other outside dispute mechanism.
Credit unions are the most pro-consumer financial institution out there, of this I am certain. A healthy and well-functioning supervisory committee process can be an integral part of that pro-consumer makeup. Credit unions don't just talk the talk about member service. They walk the walk, and CFPB needs to take this into account as it looks at the government's role in consumer protection.
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