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The Consumer Financial Protection Bureau’s initiative to improve customer service at large banks and credit unions relies on a law that banking trade groups argue does not authorize the agency to regulate customer service.

A joint letter from the American Bankers Association, the Consumer Bankers Association and the Bank Policy Institute said the CFPB would exceed its authority by attempting to regulate how banks provide service to customers.

The letter was submitted in response to the CFPB’s request for information to gather data and personal experiences about customer service at banks and credit unions. The CFPB said in a statement in June that it wanted information related to obstacles preventing people from receiving “high standards of customer service and high-quality human interactions with their banks or credit unions.”

“Many large financial institutions are increasingly shifting toward algorithmic banking and away from relationship banking,” the CFPB said in June. “[The] initiative is part of a broader effort to restore relationship banking in an era of consolidation and digitization. The decline of relationship banking has deprived some consumers of customized advice, responsiveness, and care.”

The CFPB pointed to a provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Financial Protection Act that gives consumers the right to get information, including supporting written documentation, about their account from a bank or credit union with over $10 billion in assets. The CFPB said it has not enforced or issued additional policy guidance about this provision.

Some legal groups made comments in response to the CFPB’s request for information pointing out that their clients have encountered struggles in obtaining information from banks, including when dealing with unauthorized or fraudulent transactions.

While the three banking trade groups said the section of the law referenced by the CFPB – Section 1034(c) – refers to banks’ responsibilities to provide information to consumers in a timely manner, they argued that the law does not provide the CFPB with authority “to regulate customer service or set the terms of how, when, or where banks serve their customers.”

“Consumers have the power to determine for themselves whether the customer service they receive from their bank is acceptable and to decide who gets their business,” the letter said. “Consumers understand how they want to be treated and the value they place on that treatment in selecting their financial services providers. Simply put, banks compete on customer service.”

The trade groups said the CFPB has indicated a preference for in-person customer service compared to digital, telephone or other channels, and they took issue with the CFPB’s suggestion that using artificial intelligence or machine learning as a customer service tool is a departure from relationship banking.

“By endorsing one particular business model or customer service channel, the CFPB risks undermining the robust, competitive marketplace for consumer products and services in which various business models are used by different institutions to attract different types of customers and to meet different customer needs,” the letter said. “This is directly at odds with the CFPB’s mission to help consumers and its statutory purpose and frequently stated goal of helping to foster ‘fair, transparent, and competitive marketplaces.’”

A separate letter from the National Association of Federally-Insured Credit Unions also raised concerns about the CFPB discouraging the use of digital channels and artificial intelligence.

“Some credit unions are using AI solutions to improve chat-based customer service channels, and 57 percent of NAFCU-surveyed credit unions anticipate making AI investments over the next two years,” the NAFCU said. “These developments indicate that credit unions are committed to supporting high touch member interactions, but also interested in leveraging technology to enhance existing models of relationship banking. Accordingly, the CFPB should be careful not to discourage the use of digital channels for responding to consumer inquiries, as these can improve service models through automation, increased accuracy, and streamlined resolution of common issues or questions.”