Change is impactful. For better or worse, however, when it comes to change in a business environment, it can mean a major shift in day-to-day operations and could even impact your bottom line. When you're busy running your financial institution and ensuring that your customers' needs are being met, it can be challenging to keep a pulse on all of the regulatory changes the various government agencies are handing down. Fortunately, our partners over at MasterQueue, are staying on top of regulatory changes that are coming down the pike, particularly, when it applies to debt collection and asset recovery.
Here is a quick breakdown of their latest three-part series:
Big Government Moving into Debt Collection: Part 1
The Consumer Financial Protection Bureau (CFPB) proposed a new debt collection rules report on July 28, 2016. The report focuses on small third-party debt collection vendors, most of which have staff under 20. Currently, the rule focuses on debt buyers, collection agencies, law firms, and loan services; however, creditors could follow in the coming months. Essentially, what the CFPB wants to do is "drastically overhaul the debt collection market by capping collector contact and ensuring companies collect the correct debt." The rules distinguish how first- and third-parties communicate with debtors, and anyone associated with the debtor,The challenge for lenders and third-party vendors is that there is new language and new rules, but no real roadmap for compliance.
Tracking and documentation will be key for both lenders and third-party vendors. While there is a major lack of clarity on what is expected from the CFPB, technology that gives lenders the ability to track all aspects of their debt collection and asset recovery process can provide the appropriate documentation needed to substantiate that the proper information sharing from collector to collector is taking place.
Click here to read the full article.
Big Government Moving into Debt Collection: Part 2
In part two, MasterQueue goes into more detail about how the CFBP rulings will affect lenders and third-party vendors. In short, it will significantly impact how debt collectors and collection agencies do business, forcing them to invest in the appropriate technology to track these complex rules. In addition, existing staff will have to be retrained, or additional staff will have to be hired in order to be qualified to meet these mandates. The other troubling aspect of the ruling is the fact that the CFPB wants first-party lenders to "police" their third-party vendors, and should the third-party vendors ever violate a mandate, both parties would be held responsible, read: large fines.
So, what are lenders to do?
"...the only way to follow some of these rules will be to change your technology from old school software to software that can track calls in a systematic approach with real-time reporting, and software that’s shared or interfaced between 1st and 3rd parties, and between different 3rd parties when 1st parties choose to assign accounts to multiple vendors over the course of the loan..." —MasterQueue
You might also be interested in: The Kindergarten Compliance Rulebook for Credit Unions: Part 1
Big Government Moving into Debt Collection: Part 3
Part three of MasterQueue's series dives into how the new rulings would potentially affect collector communication practices. Some of the things they're proposing include:
Regulations to govern contact frequency, the leaving of messages, time, place, and manner of collector contacts and situations regarding contact when the debtor is deceased.
Added clarification to how debt collectors can leave messages, for example, “This is John Smith calling for David Jones. David, please contact me at 1-800-555-1212.”
A proposed mandate that all companies have a toll-free number with their company name on the Caller ID for customers to call back.
A proposal for new terminology called “confirmed consumer contact”, i.e. they speak with the consumer, at which point no other numbers can be called, further stating “confirmed consumer contact would pass from collector to collector.”
A proposal for numerical restrictions on the number of contacts and considering these caps to apply to all forms of communication during the cap period, i.e. phone, email, text, mail, “or other new technologies”.
Caps on the number of contacts that can be made per week
This last ruling essentially means lenders must have a system to track every call or contact made with a debtor, including via autodialer, live call, or when contact is made in the field by a repossessor that includes every contact or call made by a third-party vendor that is simultaneously working on an account.
The gist of MasterQueue's series is that change is coming, in a big way, and both lenders and vendors must be prepared for how these changes will impact them operationally, logistically, and ultimately, financially. What is your financial institution doing to prepare for the CFPB's proposed changes? Share with us in the comments below, and let's get the conversation started.