Keep ‘Em Honest: A Wake-Up Call to the Financial Industry
There is a resounding trend in national policy-making to call for more transparency in financial processes. Numerous laws have been passed or are currently being voted on in efforts to further this trend. It is a common expectation that all information regarding programs and services that run on tax dollars should be, and are, public knowledge. This is how tax-paying citizens “keep them honest.” After several lawsuits, such as the overdraft fee case Baron and Budd helped lead against Bank of America, the Consumer Financial Protection Bureau (CFPB) has taken steps to ameliorate any injustice in banking services through similar practices.
Last month marks the first step in incorporating the U.S financial industry into the policy of honesty, even if it’s forced. The CFPB has launched a website allowing consumers access to complaints filed against large financial companies. Consumers are now privy to individual consumer complaint data, aiding their ability to review various financial products and services and make more informed decisions. This website allows access to the name of the company targeted by the complaint and the nature of the issue. The company’s response, the timeliness of the response, and the zip code of the complainer are also provided.
The significance of the CFPB granting access to such information is nothing short of a milestone. Consumers now have the ability to generate charts showing which banks garner the most complaints and which regions have the most contested financial practices. Individuals are now be able to avoid scams and unfair treatment and select banking services based on its track record. The financial industry claims that release of such information is unfair, that complaints are unverified, and publishing these complaints by the consumer protection agency implies validity to these claims. The CFPB, however, does provide confirmation that a business relationship exists between the complainant and the financial institution. This helps aid in preventing any invalid claim made by a consumer or competing entity.
The banking industry has been under intense scrutiny after several banks, such as banking giants Chase and Bank of America, were allegedly using manipulative overdraft fee procedures to maximize profits. These banks were reordering charges from largest amount to smallest instead of chronological order to maximize the overdraft fees collected. Baron and Budd was one of the leaders in the litigation surrounding the $410 million settlement in a lawsuit against Bank of America, which forced the company to change its overdraft fee policies. Numerous other national banks are still involved in litigation over overdraft fees policy.
The CFPB has been accepting complaints since June 1, and only a portion of the 17,000 complaints filed is currently available. Slated for future access are complaints about mortgages and checking accounts, signifying a future commitment to more transparency.
Policies promoting transparency are the most efficient at ensuring accountability, and furthermore, honesty, in a marketplace economy. With the exposure of cases such as the Baron and Budd case against Bank of America, it is apparent that change must take place. Financial institutions should be encouraged to compete based on honest consumer responses. This is hopefully another wave in the trend of policy-making to “keep them honest,” even if its honesty by default.