A government complaint database that helps consumers resolve grievances with financial institutions is one of several services that could soon be eliminated, according to a memo by House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Tex), which was leaked to the press yesterday.

According to individuals familiar with its workings, the Consumer Complaint Database, sponsored by the Consumer Financial Protection Bureau (CFPB), has provided useful information and assistance not only to consumers, but to businesses as well.

The fate of the database was first mentioned yesterday when Bloomberg reported on a memo by Hensarling, an outspoken critic of the CFPB. The memo outlined a new version of the Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs), a bill originally advanced by the House Financial Services Committee in September.

The new bill would lead to the repeal of the Consumer Complaint Database. It would also eliminate the CFPB's authority to punish unfair, deceptive or abusive practices among banks and other lenders, and it would allow the President to handpick—and fire—the bureau's director at will.

Since the database went live in late 2012, consumers have been able to report their complaints and get a company response, and in some instances redress. About 25,000 complaints are filed each month from consumers about their dealings with banks, credit card issuers, mortgage lenders, student-loan servicers and other financial products and services.

When a complaint is filed by a consumer, the CFPB alerts financial institutions to the complaint and the company must provide a response to the consumer through the Consumer Complaint Database, usually within 15 days. The CFPB logs the complaints in the database showing not only the name of the company the consumer is complaining about, but also how quickly the company responded and whether the consumer was satisfied with the resolution of the complaint. 

The CFPB says restitution from database complaints has contributed to its providing nearly $12 billion in relief to 29 million aggrieved consumers in the past five years.

CR's recent Consumer Voices survey shows that Americans have concerns about the accountability of the banking industry. Almost two-thirds of respondents said they are either only slightly or not at all confident that banks and investment companies are acting transparently and responsibly to charge reasonable fees and protect their investments.

Ongoing Controversy

The Consumer Complaint Database has had its critics. Banks and other financial institutions have expressed concern that it allows consumers to report complaints anonymously, and that the CFPB doesn't not fully vet the complaints for accuracy. 

“We have long objected to the public disclosure of unverified consumer complaints and repeatedly called on the Bureau to make improvements,” says John Mechem, vice president of public affairs for the Mortgage Bankers Association.

Ruth Susswein, deputy director of national priorities for Consumer Action, an advocacy group based Washington, D.C., defended the way the database works.

"A company has every right to come back and say, ‘that's not what happened’," she says. Susswein noted that in many cases, consumers resort to complaining to the CFPB when they've exhausted their efforts working directly with companies. "This may be their last, best hope for resolution,” she says. “It's an effective and unique, first-class complaint system.”

A Tool for Businesses

Consumers are not the only beneficiaries of the database. Steven Ramirez, CEO of Beyond the Arc, a consumer-experience consulting firm based in Berkeley, Ca., says his company has mined it for insights to present to financial-industry clients.

"It can be useful to financial services companies because it is the one source of data that is comparative across institutions," he says. Ramirez points out that businesses can see complaints filed against other companies as well, and that by reviewing the complaints a business can better understand its strengths and weaknesses.

While Hensarling’s office did not return a call requesting comment for this article, the Congressman has previously maintained that his bill will benefit consumers.

“The Financial CHOICE Act will help grow the economy for all Americans, not just those at the top," Hensarling's office wrote in a press release about the original bill last September. "It promotes strong and transparent markets to revitalize job creation in our poorest communities and ensures every American has the opportunity to achieve financial independence, no matter where they start out in life.”

Consumer advocates, though, do not share that opinion.

"All of the strides and changes, the safeguards, the protections that were put into place to avoid another financial crisis will disappear," says Pamela Banks, staff attorney for Consumers Union, the policy and mobilization arm of Consumer Reports. "It's like back to the wild, wild west."