Big Bank Complaints Increased in 2010

Didn’t politicians promise a new era of more consumer-friendly banks after the passage of the Dodd-Frank financial reform bill? Well, it hasn’t happened yet – at least not in critical consumer banking areas.

The Comptroller of the Currency and the Better Business Bureau reported a big uptick in consumer complaints against banks in 2010, with mortgage holders sharpening their teeth on the ankles of bank executives the most.

The total number of consumer complaints against 1,500 U.S. banks reached 80,000 by the end of 2010, according to both agencies. That’s the highest number of complaints registered against banks since 1995. It also doubles 2008’s total, the Comptroller of the Currency said.

The data echoes the results of a similar study by the American Consumer Satisfaction Index earlier in 2010. That study – based on 80,000 telephone interviews – showed a consumer satisfaction score of 75 out of 100 in 2009, down from 78 in 2008. Larger banks suffered in comparison with regional and smaller banks, the ACSI study reports. JP Morgan Chase (Stock Quote: JPM), Citigroup (Stock Quote: C) and Bank of America (Stock Quote: BAC) all showed significant declines in that study.

“The bigger banks are still struggling and have a level of satisfaction we have not seen in many years,” says David VanAmburg, director of the index.

In the Comptroller’s report, mortgage customers topped the list with the most grievances against banks. According to the Office of the Comptroller, complaints against mortgage departments doubled from 2009 to 2010 – from 19,699 to 36,000.

The agency notes that the high number of foreclosures and loan modifications, a trend that would naturally lead to some frayed nerves between consumers and financial institutions, likely set the stage for the increase.

The data also show that complaints related to credit card abuses were down in 2010 as Congress voted to take a tougher stance against banks, especially on how they charge late fees and penalties against credit card customers. The legislation seems to have had the desired effect: Such grievances were down by 15% from 2009 to 2010, from 37% to 22%.

But in other key areas like overdraft fees, complains are as high as ever. That’s despite tough legislation that cracked down on these fees. In particular, consumers still strongly dislike how banks categorize overdraft fees, paying off the largest outlays first while leaving the smaller charges last. That can result in five or 10 overdrafts a day, and big fees for banks, consumers told the OCC.

Banks are reluctant to let go of overdraft fees and for good reason: Moebs Services reported that banks earned $38.5 billion in overdraft fees in 2009. That number was expected to fall to $34 billion in 2010, and to $25 billion by 2015, Moebs added.

Overall, complaints against banks – especially the bigger ones – are an upward swing. That trend is expected to continue in 2011, and there doesn’t seem to be much Uncle Sam can do about it.

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