Jan 07, 2014 Philip Burgess
Debt collectors have had to adjust their strategies quite a bit in the past several years, especially as regulatory entities continue to reform longstanding legislation such as the Fair Debt Collection Practices Act (FDCPA). There is no doubt that the sector is in need of some more progressive regulatory guidance and oversight, as technology has largely changed the game for virtually all companies in the financial services industry and laws have been slow to catch up.
To ensure long term stability and profit growth, debt collectors will need to keep up with the progression of industry-recognized best practices, federal and state legislation, technology utilization and employee training. For now, all eyes seem to be on the federal government to see where talks regarding debt collection reforms will go in the coming months and years.
InsideARM recently reported that the Federal Reserve Board has warned creditors and other financial services providers that they still need to follow standing laws regarding debt collection even if they outsource the task to an agency that specializes in the process. The FDCPA, as well as other pieces of legislation that were passed decades ago, are just now beginning to come under some scrutiny.
For one, the source explained that banks and other financial institutions that fail to maintain a healthy level of collaboration and oversight when it comes to agreements with outsourced firms will likely have significant issues down the road. What's more, InsideARM explained that financial institutions, though not covered by the FDCPA, are expected to undergo some changes since the government wants to bring them into the mix.
According to the news provider, supervisory responsibilities will be a healthy change for the industry as a whole, as it believes ARM companies will be able to work with creditors to further strengthen the balance of regulation and compliance.
A matter of trust
As laws and regulations continue to shift, businesses that do not feel entirely comfortable with the debt collection process should avoid making big decisions on their own. Instead, working with a trustworthy provider of debt collection services can alleviate the stress of regulatory compliance, while simultaneously ensuring the quickest turnaround on activities.
Failure to oblige the statutes in place today can have dramatically negative impacts on organizations, as well as debt collection agencies. However, by following guidance and regulations, firms can minimize their risk of experiencing fines, sanctions or hurt reputations.