The CFPB and the consumer lawyers are on the same side. They’re both fighting the same battle the question is who will win?
The Consumer Financial Protection Bureau is there to protect the consumer from bad actors that offer financial products. They state “Our mission is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.” http://www.consumerfinance.gov/the-bureau/
The consumer lawyers state a similar goal. “National Consumer Law Center (NCLC) has worked on the most urgent problems affecting families in financial distress. NCLC is at the forefront in the fight for economic justice. Our work stops unfair and predatory business practices that affect millions of people across the nation.” – See more at: http://www.nclc.org/about-us/support-our-work.html#sthash.CMkYRx0P.dpuf
So it begs the question who will win? Of course the first thing would be that both would combine forces but that’s not going to work as the lawyers are small businesses throughout the United States and the government is, well…the government.
The CFPB is very well-funded and would seem to be the dominant force. Let’s pretend that they are able to complete their mission and make sure that all consumers are safe when applying for a mortgage, choosing among credit cards, are using any number of consumer financial products. This would leave no need for the consumer lawyers in the financial space. They would have to go back to working consumer product liability cases such as poorly made baby cribs or automobile recalls (ala Ralph Nader).
How would that affect the ARM industry? What’s the cost of absolute compliance to the CFPB? These are interesting questions to which I do not have the answer. Only time will be able to tell us what the effects of the CFPB will be. I do know that we are just beginning to see what the affects are of the work that is currently being done by the agency. Most of the “Churn” going on in the industry today is actually knee-jerk reactions to directives from the agency by agencies and debt buyers in an effort to reduce risk across the board. When industries go through this type of paradigm shift in regulatory oversight, many times the pendulum swings too far in one direction.
It’s very obvious that compliance will be a large portion of any collection agency or law firm’s budget in the future. The players that are able to understand and embrace the future by creating, purchasing and using compliance tools and technology will be able to be a big part of that future. Whether it is process driven compliance, technology driven compliance or good old-fashioned training, the future is compliant, compassionate collections.
The CFPB and the consumer lawyers are both on the same side and so is the ARM industry in 2014. This is the reality that we must all face; regulation is now in charge of the industry and we must comply as business owners and operators. Since many of the regulations are directed towards the people performing the work, i.e. the debt collectors, the CFPB is actually attacking your business strategy. You must learn to create a new business model based upon the new marketplace in order to succeed in 2014.
Don’t let the ever-changing marketplace overrun your business model contact Lighthouse Consulting for a free online evaluation of your collection agency our law firm at 904-687-1687.
Don’t miss this informative session at the Upcoming National Collections & Operational Risk Conference, March 24-26, Miami, FL
Phillip W. Duff Founder, LIGHTHOUSE CONSULTING
Michael Thurman Partner, LOEB & LOEB LLP
Tuesday March 25, 2014 | 3:45 – 4:30 PM