How to Build Trusted Creditor-Collector Relationships (and Better Market Your Agency)

When the CFPB introduced Reg F in late 2020, a lot of attention focused on the change in collector-debtor communication practices. A less discussed, but equally significant change is the increased oversight responsibilities creditors have when outsourcing collections. With the CFPB’s announcement about extending its supervisory authority to non-bank financial institutions, vendor management and auditing is increasingly becoming a priority for originators and lenders. As a result, for collection agencies, robust compliance management and reporting capabilities now represent a competitive advantage when marketing their services to creditors.  

For creditors and collectors alike,  Reg F oversight requirements create a new reality of shared compliance responsibility. In this post we discuss how servicers and creditors can better collaborate by using new tools that provide all parties with critical insights and generate the transparency and trust needed to succeed in a tightening regulatory climate. With the help of these tools, servicers can function as trusted compliance partners for creditors, instead of potential high-risk liabilities. They can also help growing ARM businesses minimize risk when contracting with 3rd parties.  

Easing the Oversight Burden

Reg F transforms the creditor-collection agency relationship equation by requiring close cooperation on compliance issues. But it also raises legitimate concerns about increased workload and financial burdens. For collections agencies, adding staff to extract data and compile reports might be near-impossible in times of declining ARM industry profits. Likewise, for creditors, the new oversight responsibilities also require increased documentation and audits that are resource-intensive.

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Advanced, AI-based compliance management platforms can ease the burden on all parties by automating many processes. In fact, they can transform the burden into benefit by providing insights and reports that are incisive and actionable as well as timely. They can help creditors and agencies develop more trusted relationships with their vendors, automate reporting, reduce risk and compliance management costs, and mitigate reputational and legal threats. 

The most valuable platforms cover the full operational spectrum, from monitoring, archiving and alerting through remediation, reporting and agent coaching. While many servicers have separate archiving, speech analytics, scoring or coaching systems in place, switching to an “all-in-one” solution can reduce risk of critical data being lost in transitions and eliminate manpower-intensive bridging of gaps between systems. They reduce the overhead involved in generating compliance health reports and provide 1st parties with the visibility they need into servicers’ operations and associated risks.  

What to look for in a compliance platform 

When selecting an end-to-end compliance management platform, make sure it comes with these 4 essential capabilities:

Comprehensive reports and audit trails 

New Reg F-mandated oversight responsibilities mean that vendor due diligence and regular audits will  be central elements of creditors’ compliance processes. In case of an external audit, seamless documentation of issue discovery, vendor communication, and remediation activity are a big plus. 

End-to-end compliance management platforms offer comprehensive activity documentation at a single access point. Servicers can easily provide creditors with the data they need, and enable them to track performance and improvements over time. Automated systems allow creditors and servicers alike to be audit-ready at all times, with violation and mitigation logs always current.

100% coverage

Traditional monitoring process sampling covers only a small percentage of interactions. Agencies and creditors may be unaware of misconduct that falls outside of the sample unless (or until) a complaint is filed or a regulator knocks on the door. 

Automated monitoring systems audit 100% of calls, providing a comprehensive picture of legal risks for collectors as well as for creditors. Multi-language capabilities represent an extra “bonus” since they can monitor and transcribe consumer interactions conducted in foreign languages such as Spanish or Chinese, and then automatically translate to English. 

Real-time risk monitoring

Traditional sampling and auditing methods not only fail to cover the entirety of consumer interactions, they also introduce substantial delays and gaps between the moment the violation has occurred and when it is detected and ultimately mitigated. Remediation is most effective when it’s provided immediately following the problematic event. If audit results are received only monthly – or even weekly – intensive monitoring and coaching will be likewise delayed, enabling poor practices to become further entrenched and exposing all parties to risk. By the time post-coaching performance is assessed, several weeks might have passed.

In contrast, AI-based, automated monitoring solutions flag violations as they occur, so that mitigation and agent coaching can be initiated immediately. With information regarding risks available as they emerge, stakeholders can act to protect themselves against costly litigation, potential fines and damage to their brands. Real-time monitoring and reporting can give creditors that “ear” to the ground that is usually not available when using 3rd party services.

Data privacy and security compliance 

Advanced platforms integrate data security and privacy guardrails to ensure full compliance with consumer data protection requirements. Features to look out for include automated PII redaction, out-of-the-box tools for data residency compliance, end-to-end encryption, SOC2, ISO 27001, and PCI compliance.

Looking ahead

Regulations and oversight responsibilities will continue to increase in the coming months and years. Investing in a plan and technology now, not later, will help your organization stay ahead of the curve.