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Banks and Credit Unions Handle Disputes Differently

Banks and Credit Unions Handle Disputes Differently

Have a beef with your bank? Tell it to the bank-chosen arbitrator as Pew Charitable Trusts found that 64% of polled banks resolve customer complaints through “mandatory binding arbitration.”

According to The New York Times, Pew found that the bigger the bank, the more likely it is to demand arbitration or “impose other restrictions.” Pew, a non-profit organization that conducts analysis to improve public policy, said that banks opt for mandatory binding arbitration because the process is faster and cheaper than going through the courts. Consumer advocates are concerned that this swift method of conflict resolution may restrict the consumer’s appeal options and presents a conflict of interest if the bank repeatedly uses the same arbitrators on an ongoing basis.

“Consumers need to be educated about this,” Cora Hume, project manager for Pew’s Safe Checking in the Electronic Age Project, told The New York Times.

How Do Credit Unions Approach Member Complaints?

The Pew study examined both banks and credit unions but found that none of the credit unions in the poll handled member complaints through outside mediation.

Although every credit union is different, Credit Unions Online found that a common thread amongst many is that almost all member disputes are handled in-house. For example, at Jeanne D'Arc Credit Union ($990 million, Lowell, MA), disputes are handled through its internal Member Complaint Committee.

“This policy was developed to ensure a positive member experience in all interactions that members have with Jeanne D'Arc,” explains Michelle Silveira, SVP/Chief Marketing Officer. “Situations may arise in which a member contacts regulatory authorities or the credit union directly to express a concern or communicate an issue encountered. This policy details steps which will be undertaken to ensure the credit union appropriately manages the member complaint process.”

Silveira adds that her credit union does not use an outside arbitrator. “We resolve all disputes by contacting and discussing the issue at great lengths with our members. If the complaint rises to a certain level, we notify the Supervisory Committee of the complaint and actions that have been taken to date.”

Member’s Student Loan Dreams Realized

Like Jean D’Arc, First Financial Federal Credit Union ($175.9 million, Wall, NJ) approaches member disputes and issues in-house. “I can tell you that as far as credit unions handling member complaints/issues as opposed to a big bank, is that if they call our member service center they are speaking with a live in-house representative, and if the issue is serious enough and they would like to, they can even speak to Nancy Sanchez, our AVP of Member Services or our Chief Operating Officer,” says Jessica Revoir, Marketing Manager. “You won't find that at a big bank!”

Revoir recounts a recent incident surrounding a member trying to obtain a student loan. “We recently published a blog and sent out a press release about how a determined student was trying to apply for a student loan and due to his light credit, was initially not approved. However, he really wanted to go to Rutgers University and was persistent, and actually got to meet with our President & CEO and our COO and was approved for the loan.”

In the release, Alice Stevens, First Financial’s Chief Operating Officer says that even though after initial review showed the student’s credit was insufficient, the credit union still wanted to help.

“We know that times are tough financially for many people out there, and that it can be a great challenge financing a college education. Initially, when we reviewed Matthew’s student loan application, his light credit wasn’t enough for us to be able to fund his entire college education " even though we wanted to be able to assist. After we received Matthew’s email, we decided to invite Matthew and his mother to our office to hear their story in person and see how we could help this family " after all, isn’t that what the credit union movement is all about?”

Tired of getting the run around from your bank? Find a credit union and free yourself from the red tape.

By Gina Ragusa
Published December 10, 2012
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