Debt Collection & Recovery
I recently moderated a regulatory panel discussion before a group of nearly 100 collections and recovery (C&R) professionals at the FICO® Debt Manager™ User Group Forum. The esteemed panel consisted of a mix of veteran policy and business leaders, including: Maria Wolvin, Vice President and Senior Counsel of Regulatory Affairs at ACA International; Terry Collins, Collections and Recovery Manager at Trustmark National Bank; and Lucia Lebens, Vice President of Government Relations and Public Policy at Navient.
Much of the discussion focused on what C&R professionals can expect in the new US regulatory environment that has emerged in the wake of the November elections. While our experts spoke on a number of hot-button topics, three main themes emerged.
CFPB Debt Collection Rulemaking Will Likely Move Forward
The panel discussed the CFPB’s continued focus on developing new debt collection regulations. The CFPB has indicated that its next pre-rule action will be the convening of a small business review panel and the release of an outline that previews its thinking regarding a first-of-its kind rule governing first-party creditors. The panel agreed that the details will likely pick up elements from an outline released last summer related to an effort to update the Fair Debt Collections Practice Act (FDCPA), which applies to third-party collectors.
In a previous post, I discussed the sudden emergence of the Congressional Review Act (CRA) and its impact on future regulations. With the threat that Congress can rollback any agency regulation within 60 legislative days of unveiling a final rule, it is clear that the CFPB is constrained from completing any rulemaking that might spark opposition from the Republican-controlled Congress and White House. However, the law does not apply to pre-rule and proposed rulemaking activities.
In short, the CFPB can continue with its work, short of issuing a final rule, without triggering any threat from the CRA. As a result, there was agreement on the panel that the CFPB would continue this year to move the ball forward in this area.
States Are Likely to Pick-Up the Slack
The panel also agreed that a slowdown in federal regulatory activity does not mean that new debt collection rules will come to a screeching halt. In times of federal inaction, the states often pick up the slack.
As an example, it was noted that already there has been an uptick in the number of student loan servicing proposals introduced in state legislatures. In addition, given the impact of the CRA at the federal level, it is possible that state agencies may promulgate new debt collections rules like those recently issued by the Department of Financial Services in New York.
Of course, the panel experts acknowledged that increased state activity presents compliance challenges of its own, threatening to create a patchwork quilt of regulations.
Meaningful TCPA Reform Is a Real Possibility
The prospects of reforming the Telephone Consumer Protection Act (TCPA) generated the most lively and upbeat conversation of the morning. Panelists were joined by many in the audience in expressing their frustration with the obstacles associated with the sending of texts and automated communications to customers’ mobile phones. These impediments were the result of an outdated 1991 statute, overly restrictive regulations and the threat of class action lawsuits.
However, the panel was optimistic that, for the first time in many years, there was a real possibility of reform. With a new administration and a change of leadership at the FCC, 2017 is set to deliver impactful changes that would enable organizations to send non-telemarketing messages to their customers preferred communication channels, most notably mobile phones. This would provide relief from some of the existing compliance burden and significant liability exposure.
It was noted that new FCC Chairman Ajit Pai appears to be waiting to take further action until the DC Circuit of Appeals issues its decision in the industry’s appeal of the FCC’s July 2015 TCPA Declaratory Ruling and Order. The court’s decision is expected at any time.
After the panel discussion, I was approached by several attendees who expressed that their regulatory wish list was short. They just want regulatory certainty so they know the rules of the road in which to operate their business.
While 2017 will not likely bring the certainty that the industry is looking for, there does appear to be at least one positive development on the near horizon. Given the regulatory challenges that has confronted C&R professionals in recent years, any favorable developments related to the TCPA would be welcome news.